FIRST-TIME house buyers are finding it impossible to buy because few houses are affordable. Much has been said about making affordable houses available for younger Malaysians who aspire to own their homes, but unfortunately, the end-result so far is disappointing. Firstly, affordable homes are too expensive for the average middle-income young person, whether single or married. When “affordable” is defined as starting from RM300,000, the challenge to afford one is immense because the demands on disposable incomes include other heavy recurring expenditure like car loans, utility bills, cost of commute and all manner of financial commitments. Many fresh graduates are also burdened with study loans. And, most importantly, average incomes are generally not rising proportional to cost of living, which includes the cost of housing.
The cost of land, many claim, is the reason behind the high prices of houses. But, according to a study by Khazanah Research Institute (KRI), which sees the problem as one of severe unaffordability, the reverse is true: “rising house prices is seen as a determining factor for the rise in land price”. This presents the country with a quandary for as long as prices are kept high. Only a reduction in the price of houses can bring land price down. For instance, the KRI says that houses in Malacca are the most affordable in the country — that is, when using the received measurement of affordability, where the median house price is three times the median household income or less. But, would not a rush to buy in Malacca up the price of both house and land?
Be that as it may, the problem is undeniable, and it is often blamed on foreign buyers and speculators who keep prices artificially high. In Kuala Lumpur and Penang, the KRI finds that houses are way unaffordable. So, where do workers live under this situation? They can rent, but because houses are unaffordable, rents are high. A good transport infrastructure extending beyond the suburbs to the outlying areas where properties are cheaper may alleviate the problem somewhat.
In England, at the end of last year, a scheme was announced offering new homes to first-time buyers below the age of 40, with a 20 per cent discount. The scheme is a collaboration between government, local authorities and house builders, and the discount is made possible by changing the planning system, freeing it from planning costs and levies, as well as identifying parcels of underused and idle land. Nevertheless, although of lower cost, these homes are of high quality and well designed. If then, houses are to be affordable to Malaysian middle-income buyers, the government must step in. Prices must be kept low by lowering development cost and allocating land for the purpose. Instead, experience shows that land in city areas used for low-cost housing is now being used for commercial development. What then is lacking is the political will to keep middling price range homes truly affordable. This is a social responsibility, and Putrajaya must take the lead because medium-cost homes are sorely needed.