Middle-income housing trap


Affordable housing for the in-betweens gets deserving attention in the 2013 Budget

IN the first chapter in its first report on the New Economic Model (NEM), the National Economic Action Council rhetorically asked why a new approach to economic development was needed. Its answer, in a nutshell, was that it was because "we are caught in a middle-income trap". With the NEM targeting assistance to the bottom 40 per cent of households earning less than RM1,500, many Malaysians with incomes below the top 20 per cent must feel they are also trapped in the middle. To be sure, those who are not on six-figure salaries have not been left out altogether in the annual Budget. Those who fall in between the very rich and the very poor are as entitled to the fuel and food subsidies as everyone else. The book vouchers are for all students in tertiary institutions. The cut-off point for the 1Malaysia People's Aid (BR1M) is RM3,000, and that for a full loan from the National Higher Education Fund Corporation is RM4,000.

Still, with the cost of living rising fast and incomes growing less slowly, many have found big ticket items that used to define a middle-class lifestyle beyond their reach. Undoubtedly, instalment plans, credit cards and insurance schemes make it possible to buy a car, dine at a posh restaurant, and seek medical treatment at a private clinic. Many still find the means to hire a maid and go on a holiday. But with housing prices going through the roof in recent years, many have been priced out of owning their dream home. Those within their price range tend to be inferior housing in the least accessible areas, furthest from jobs and with the poorest services.

For this reason, "comfortable and affordable housing", as an "economic" and "moral imperative", not only for low-income earners but also for the middle class, deserves the focus it gets in next year's Budget. Indeed, there has been relief for first-home and other middle-income home-buyers since the 2012 Budget. In next year's Budget, the income limits have been raised for both the 1Malaysia People's Housing Scheme (PR1MA) and the My First Home Scheme, allowing a much broader base of middle-income earners to benefit. Certainly, the public sector alone cannot boost the supply of affordable houses. Working closely with private developers under the Housing Facilitation Fund is one solution. But by injecting RM500 million into PRIMA to build 80,000 houses, the stock of public housing will get a big boost. What is clear is that federal and state collaboration is vital in providing decent and affordable places to live.

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