Mar 10 2011, 09:30 PM
QUOTE
Citizen’s right to affordable housing
HAVING decent shelter, adequate food, good health care and education are basic human rights. The government has a moral responsibility to ensure that majority of its citizens can either own their house or afford to rent public housing.
Sadly for the citizens, affordable housing is not easily available. House prices have soared to exorbitant levels in major cities so that even the middle class cannot afford to own a house or apartment, let alone the lower classes. In 2009, the average house price in Kuala Lumpur was RM390,000 almost six times the average household income. It was even worse in Penang Island where the average house price was RM540,000 or eight times the average household income. Clearly, this is beyond the reach of the average family. A ratio of house price to household income of three to four times is internationally acceptable.
The problem is not that there are not enough houses but that there is a mismatch between demand and supply. The majority of Malaysians want affordable homes but developers are supplying houses that they cannot afford. Developers prefer to cater to investors and speculators who buy to rent or to flip over and make money. Many of these people own two or more houses. It is a fact that developers give preferences and reserve the best units for clients who buy multiple units even before a project is officially launched. Ordinary house buyers then have to queue and accept less desirable units or buy them from the investors usually at higher prices. Developers go overseas to aggressively market properties as they are still cheap by international standards.
The government through its misplaced priority is aiding this process by encouraging foreigners to invest not only in apartments but also landed property. Unlike Indonesia, the Philippines and Thailand, Malaysia is one of the few countries in Southeast Asia that allows foreigners to own landed property.
Banks also contribute to escalation of house prices through various aggressive marketing techniques. They have relaxed credit standards and are willing to lend up to 95% of the value of a property. They offer variable, rather than fixed-rate loans, to reduce initial instalments in a low-interest rate environment. Another method to reduce monthly instalments is to stretch the loan tenure to 40 years, beyond the work life of a borrower. The offer of two-generation loans that stretch to 70 years is a reflection of how absurd the situation has become. Borrowers are encouraged to saddle future generations with debt. Hence, the ready availability of housing loans - to those who are rich enough to buy multiple units, and to those who can barely afford to buy but are able to do through stretching loan tenure to unreasonable lengths or through offering low initial teaser rates – is a major cause of rising house prices.
To make housing affordable to ordinary Malaysians and to reduce unsustainable and unhealthy rise in property prices, the government should do the following.
Formulate a public housing policy that provides affordable housing, particularly in urban areas, to people below a certain level of income. A good example is the Singapore Housing Board where the government spearheads the building of affordable housing for a majority of its citizens. Alternatively, the government can consider doing this in partnership with the private sector. Where land is scarce and density high, a comprehensive planning of land use with provision of good public transport to reduce traffic congestion is necessary.
For the private housing sector, the government must take a leading role to monitor property prices and take appropriate and timely measures to prevent an unhealthy and unsustainable run up in property prices. One lesson of the financial crisis is central banks and policymakers have focused narrowly on consumer price and wage inflation and neglected to monitor and regulate asset price inflation. It is time to recognise that asset inflation (property and stocks) has posed a greater threat to financial and economic stability. The measure by Bank Negara to limit buyers of third property to a 70% loan to value ratio is not enough to curb excessive investment and speculation. We suggest that loan ratio be reduced to a much lower level to test the market reaction.
The government should increase property gains tax for short-term transactions. The present 5% property gains tax for property held under five years is not discriminating enough. The tax rate should be increased significantly for shorter holding period; the same should be done for sale of the second and successive properties.
The government should stop the sale of landed properties to foreigners. As for non-landed properties, foreigners should not be eligible for local housing loans, unless they are permanent residents.
Town planners and local councils should have comprehensive land use planning and give more importance to developing green and friendly cities, first class public transport system and less to the building of more shopping malls and roads.
The government should put the needs of the majority of Malaysians first.
S. M. Mohamed Idris
President
Consumers Association of Penang
HAVING decent shelter, adequate food, good health care and education are basic human rights. The government has a moral responsibility to ensure that majority of its citizens can either own their house or afford to rent public housing.
Sadly for the citizens, affordable housing is not easily available. House prices have soared to exorbitant levels in major cities so that even the middle class cannot afford to own a house or apartment, let alone the lower classes. In 2009, the average house price in Kuala Lumpur was RM390,000 almost six times the average household income. It was even worse in Penang Island where the average house price was RM540,000 or eight times the average household income. Clearly, this is beyond the reach of the average family. A ratio of house price to household income of three to four times is internationally acceptable.
The problem is not that there are not enough houses but that there is a mismatch between demand and supply. The majority of Malaysians want affordable homes but developers are supplying houses that they cannot afford. Developers prefer to cater to investors and speculators who buy to rent or to flip over and make money. Many of these people own two or more houses. It is a fact that developers give preferences and reserve the best units for clients who buy multiple units even before a project is officially launched. Ordinary house buyers then have to queue and accept less desirable units or buy them from the investors usually at higher prices. Developers go overseas to aggressively market properties as they are still cheap by international standards.
The government through its misplaced priority is aiding this process by encouraging foreigners to invest not only in apartments but also landed property. Unlike Indonesia, the Philippines and Thailand, Malaysia is one of the few countries in Southeast Asia that allows foreigners to own landed property.
Banks also contribute to escalation of house prices through various aggressive marketing techniques. They have relaxed credit standards and are willing to lend up to 95% of the value of a property. They offer variable, rather than fixed-rate loans, to reduce initial instalments in a low-interest rate environment. Another method to reduce monthly instalments is to stretch the loan tenure to 40 years, beyond the work life of a borrower. The offer of two-generation loans that stretch to 70 years is a reflection of how absurd the situation has become. Borrowers are encouraged to saddle future generations with debt. Hence, the ready availability of housing loans - to those who are rich enough to buy multiple units, and to those who can barely afford to buy but are able to do through stretching loan tenure to unreasonable lengths or through offering low initial teaser rates – is a major cause of rising house prices.
To make housing affordable to ordinary Malaysians and to reduce unsustainable and unhealthy rise in property prices, the government should do the following.
Formulate a public housing policy that provides affordable housing, particularly in urban areas, to people below a certain level of income. A good example is the Singapore Housing Board where the government spearheads the building of affordable housing for a majority of its citizens. Alternatively, the government can consider doing this in partnership with the private sector. Where land is scarce and density high, a comprehensive planning of land use with provision of good public transport to reduce traffic congestion is necessary.
For the private housing sector, the government must take a leading role to monitor property prices and take appropriate and timely measures to prevent an unhealthy and unsustainable run up in property prices. One lesson of the financial crisis is central banks and policymakers have focused narrowly on consumer price and wage inflation and neglected to monitor and regulate asset price inflation. It is time to recognise that asset inflation (property and stocks) has posed a greater threat to financial and economic stability. The measure by Bank Negara to limit buyers of third property to a 70% loan to value ratio is not enough to curb excessive investment and speculation. We suggest that loan ratio be reduced to a much lower level to test the market reaction.
The government should increase property gains tax for short-term transactions. The present 5% property gains tax for property held under five years is not discriminating enough. The tax rate should be increased significantly for shorter holding period; the same should be done for sale of the second and successive properties.
The government should stop the sale of landed properties to foreigners. As for non-landed properties, foreigners should not be eligible for local housing loans, unless they are permanent residents.
Town planners and local councils should have comprehensive land use planning and give more importance to developing green and friendly cities, first class public transport system and less to the building of more shopping malls and roads.
The government should put the needs of the majority of Malaysians first.
S. M. Mohamed Idris
President
Consumers Association of Penang
Black Pepper Sauce
Very much true. So sad with the reality in Malaysia.
Quote
Even with all this troubles, Tesco opened a new branch in Cheng. Business is average, better than hatten square at least. Same can be said about Giant, which open at Sentral.
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