Focus View
Ad hoc policies won’t lead to cheaper homes
FocusM team | 24 Nov 2017 00:30
The government’s decision to restrict approvals for the construction of shopping malls and residential units with a selling price of more than RM1 mil is a step in the right direction, but its impact on affordable housing is questionable.

It seems like an ad hoc decision that masks fundamental problems. Will the policy suddenly lead to a significant increase in the supply of cheaper homes? That’s highly unlikely.

The government’s move follows a report by Bank Negara Malaysia, warning that the mismatch of supply and demand in the property market could deteriorate further if nothing is done to address it.

But the issue of affordable housing is not going to be solved merely by clamping down on developments of expensive homes and condominiums.

The move is commendable, but we won’t be seeing developers suddenly rushing to build hundreds and thousands of cheaper houses. 

Property is a big business. Many major players are public listed and their shareholders demand ever-increasing profits and dividends. Once the economy rebounds and the market recovers, they will be back building more units with fatter margins. 

The government should also look at why its own housing agencies have failed to meet its affordable housing targets. For example, PR1MA had initially targeted to build 500,000 homes by 2018, which was then revised to 210,000. Even then, the agency has achieved only a mere 5% of the revised target.

If the government, with easy access to land and ample financial resources, is unable to build a sufficient number of affordable homes, is it realistic to hope that the private sector will pick up the slack?

The issue is a complex one and not just confined to supply. With rising costs of living, many are finding even the cheapest homes beyond their means. The government has not lacked good ideas in tackling the issue, but implementation has been a problem.

Schemes such as the build-then-sell system, industrialised building systems (IBS) and rent-to-own concepts have been mooted for years as part of the long-term solution to bringing property prices down, but have failed to gain substantial traction.

The government should be looking at coherent and holistic solutions to housing, instead of issuing knee-jerk policies that might backfire in the long run.