KUCHING: Following the sustainable infrastructure and housing panel session at the ‘Malaysia: A New Dawn’ conference earlier last week, analysts lauded the thoughtful approach to affordable housing plans via Dasar Perumahan Negara 2.0 or the National Affordable Housing Policy (NAHP) 2.0.
In a recent sector analysis, the research team at Kenanga Investment Bank Bhd (Kenanga Research) noted that the NAHP 2.0 would focus on affordable housing policies and its long-term sustainability, solutions to overcome financing barriers faced by first-time house buyers, and addressing the supply overhang rate, which has been said to be more severe for homes priced below RM500,000 per unit, rather than what has been publicly perceived.
It was also indicated there would be more stringent enforcements on developers’ responsibilities and deliverables, including policies, which address developers holding on to unsold units for extended periods.
“If so, we opine this will improve the quality of houses as developers will have to ensure that these houses are both saleable and liveable, which will essentially weed out the weaker developers,” said the research team said.
“Considering our population size of 32 million, we have always opined that there are just far too many developers in Malaysia, both publicly listed and private, as the barrier of entry to this business is considered low.
“We note that many non-land-related driven sectors have delved into property development resulting in an overcrowding of developers.”
It added, “While we await for further details on the NAHP 2.0, the Minister did highlight that affordable homes will be classified in three tiers and will be dependent on the median house price transaction as well as the median income of a particular area; this would be those priced below RM150,000 per unit, RM150,000 to RM350,000 per unit and RM350,000 to RM500,000 per unit, depending on areas or state.
“We are also glad that the government is looking into the liveability of these PPR accommodations as many are no longer ‘liveable’ by today’s standards; examples include setting a minimum house size of 850sf and certain basic facilities.
“They are also cognisant that these accommodations tend to be poorly managed and maintained, resulting in poor occupancy and deterioration of the asset and leading to creation of ‘slums’.”
It pointed out that the government is also looking to better integrate the affordable housing components into normal developments to avoid ‘slums’ formation in the future, which of course poses challenges for developers; clarity on this matter is required as not much further details were given.
“However, there are several proposals being considered including private developers paying a decent levy to Minister of Housing & Local Government or KPKT in the absence of meeting this obligation. We hope to get more details on this once the NAHP 2.0 is out,” it added.
It also noted that the government has highlighted the problem of overhang.
“As mentioned earlier, KPKT acknowledges that the supply overhang rate is more severe for houses priced below RM500,000 per unit; part of the government’s affordable housing supply target will come from developers and the secondary market.
“KPKT is looking at disposal mechanisms to address this issue, which includes reviewing credit assessment and lending parameters from Bank Negara Malaysia (BNM) perspectives, which we will elaborate below.
“They are looking to implement these schemes for properties priced below RM500k/unit and will be hosting an expo to feature these properties for first-time house buyers.
“Hopefully, this will kill two birds with one stone as it tackles the supply overhangs while increasing home ownerships amongst the B40 and M40 group.
“But what does this mean for developers?
It will help developers clear inventories while also alleviating the sector’s current oversupply situation for residential priced below RM500k/unit; however, it would also mean that developers may have to be sparing with new launches given a more active secondary market; meanwhile, demand for the mid-higher end market which is RM500,000 to RM1 million per unit is limited due to affordability issues or financing hurdles, implying that overall new launches could be lower than in the last two years,” it said.
It noted that currently, the NAHP 2.0 is pending cabinet’s approval and expected to be released towards end October to early November.
“Subsequently, the national affordable housing expo will likely kick off in Jan-Feb 2019, which will feature residentials priced below RM500,000 per unit and will be accompanied with new financing options to facilitate home ownerships amongst the B40 and M40 groups.
“The word ‘hair-cut’ was used numerous times to encourage developers to sell their unsold units at lower prices, particularly for the affordable market,” it added.
Aside from that, the research team said it lauded the ministry’s values in the importance of property data and the need to do studies to project demand and supply.
“We believe there is a strong need for a digital approach towards a transparent data system which entails compliance from all developers/land offices/buyers to submit the necessary data for the industry’s long-term health,” it added.