LAST week, I wrote a broad piece on the 2018 Budget and its potential effects on the property market in general.
This week, I will be touching on the budget in detail, focusing on its emphasis on affordable housing.
The total allocation for the housing and residential sector is RM2.2 billion. Seven projects have been planned for next year, which comprise the following:
•17,300 housing units of the People’s Housing Project (PPR).
•3,000 units of the Rumah Mesra Rakyat programme under Syarikat Perumahan Negara Bhd (SPNB).
•210,000 units under the 1Malaysia People’s Housing (PR1MA) programme.
•600 units under the MyBeautiful New Homes programme (MyBNHomes) for the bottom 40 per cent household income group (B40) in Terengganu, Pahang, Melaka, Johor, Sabah and Sarawak, as well as Orang Asli areas.
•2,000 units under the MyDeposit programme and My Home programme for developers to provide more affordable homes.
•RM200 million allocation for maintenance and repair of houses.
PR1MA houses are supposed to be priced at RM250,000.00 and below. A total of RM1.5 billion has been allocated for the programme over the next two years.
An innovative scheme which is being introduced under PR1MA is the “step up financing scheme”. This is now being extended to private housing developers, subject to a set of criteria which will be decided later.
The rental market also received a small shot in the arm. A tax exemption has been announced on 50 per cent of residential rental income for rentals up to RM2,000 per month to Malaysians residing in the country. The exemption is for the assessment periods between 2018 and 2020. This will help, in a small way, to increase the disposable incomes of the lucky few.
With so much emphasis being placed on affordable housing, the property market is expected to come alive again and move in an upward direction. This is expected to gain momentum throughout 2018, gathering speed as it goes along. Barring any unfortunate circumstances, the market is widely expected to surge forward in 2019 and 2020, peaking somewhat in 2021.
The B40 segment is expected to be the ones to benefit the most from these initiatives as they rightfully should. They have been ignored for far too long. No one has really cared about their housing needs. It is time this sector is looked after and some of their demands met.
If all these planned projects take off in a timely manner, it would greatly help meet the pent-up demand for the below-RM250,000 housing segment. As activity picks up in the sector, more developers will join the bandwagon in building homes in this price range.
As optimism returns to the market, more activities are expected in the upstream sector of the property market. This will in turn lead to a more positive perception of the market. The positive perception will then help propel the market upwards.
The trick will be in the implementation process. These projects will need to kick-start urgently and complete on time. Great care must be taken to ensure subsidised properties are indeed sold to those that truly deserve them. This must be done without fear or favour based on race, religious, colour or creed. The criteria for the recipients must be set out clearly and followed strictly to the letter as well as based on their financial needs and repayment capacity.
We must never create a situation where there is any risk of these properties falling into the hands of those who are not eligible for such properties.
It is my fervent hope that these initiatives take off quickly and produce the good results expected of them.
Until then, happy hunting and may the force be with you.