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For middle-income Malaysian urbanites, housing woes are a key concern in this election

KUALA LUMPUR / JOHOR BARU — While rising cost of living has taken centre-stage in Malaysia’s general election campaign, another issue bubbling beneath the surface could come into play as voters head to the polls on May 9 – the lack of affordable housing for the middle-class. Nowhere is this more acute than in the urban constituencies in the states of Johor, Kuala Lumpur and Selangor.

For middle-income Malaysian urbanites, housing woes are a key concern in this election

Construction is underway for the sprawling US$100 billion (S$133.3 billion) Forest City mega-project in Johor, Malaysia. Growth in housing prices have outpaced that of household income.

KUALA LUMPUR / JOHOR BARU — While rising cost of living has taken centre-stage in Malaysia’s general election campaign, another issue bubbling beneath the surface could come into play as voters head to the polls on May 9 – the lack of affordable housing for the middle-class.

Nowhere is this more acute than in the urban constituencies in the states of Johor, Kuala Lumpur and Selangor.

Many of these urbanites are part of the middle 40 percentile – commonly referred to as M40 - with a household income of between RM3,860 (S$1,306.55) and RM8,319 a month.

Take diagnostics executive Ammar Osman, for example. The 30-year-old lives in Pontian in south-west Johor and takes about an hour just to drive to his office in Johor Bahru for work.

The father of three would like to own a house in the state capital but lamented that homes there were beyond his reach, with a studio apartment alone going for at least RM300,000.

His hands are also tied, as he is still paying off his housing loan in Pontian, which runs up to about RM1,500 a month.

Associate Professor Mohd Faisal Hazis, the head of the Centre for Asian Studies at Universiti Kebangsaan Malaysia in Selangor, said: "Housing is one of the big economic issues that has become increasingly important for a lot of voters. With houses getting more expensive, voters will be looking at the ability of political parties to deliver on their promises."

HOMES ‘SERIOUSLY UNAFFORDABLE’

Malaysia’s central bank in its quarterly bulletin released in February this year noted that homes in the country were "seriously unaffordable" in 2016 by international standards.

Among the factors that contributed to housing unaffordability is a mismatch between the prices of new launches and what Malaysians can afford, as well as a growth in house prices that has outpaced that of household income.

It is estimated that the maximum affordable house price for this group is RM282,000. But the actual median house price was RM313,000, with the median national household income at RM5,228.

Bank Negara also noted that from 2007 to 2016, house prices grew by 9.8 per cent while household income only increased by 8.3 per cent.

The Real Estate and Housing Developers’ Association Malaysia (Rehda) - a body that represents 1,400 developers – puts the blame of this mismatch squarely on stagnate salaries. 

"For salaries to go up, Malaysia has to be more competitive, productivity has to go up," Rehda president FD Iskandar Mohamed Mansor was quoted saying last month.

At the same time, developers claim they are also squeezed by rising costs.

Johor Rehda chairman Steve Chong told TODAY that the costs of land, labour and construction materials have been rising. Land has also become scarce.

Also pushing up housing prices was demand, said Mr Chong, citing how people from other parts of Malaysia have been settling into cities like Kuala Lumpur and Johor Bahru because of better economic opportunities.

“With the influx of workers taking advantage of Singapore’s exchange rate, a lot of people from the north (of Malaysia) are rushing into Johor,” he said.

INITIATIVES TO HELP THE MIDDLE CLASS

For years, the ruling Barisan Nasional (BN) government has provided housing programmes for the bottom 40 percentile (B40), such as providing government-owned public housing units for rent at RM124 a month.

There is also a rent-to-own scheme, which allows them to eventually own the low-cost housing that they lease from the government.

But only recently has it started rolling out programmes for the M40 group.

Among these are housing projects around prime urban areas in Malaysia by PR1MA Corp, a federal-government-linked developer that caters specifically for M40s.

To date, 2,634 PR1MA homes - priced between RM100,000 and RM400,000 - in the Klang Valley have been completed, and some 4,024 units are under construction in six locations in Kuala Lumpur and Selangor.

"Prices vary depending on location and unit size,” the company said in response to TODAY’s queries.

For instance, PR1MA@Alam Damai outside the city centre is priced from RM243,000; whereas PR1MA@Jalan Jubilee, which is located in the heart of Kuala Lumpur, is priced from RM400,000.

"PR1MA homes are on average 20 per cent below market price," it added.

The company is also planning to build more housing projects along the Light Rail Transit network to enable people to get to work easier.

However, Malaysians who qualify for the PR1MA scheme say it is still difficult to get a unit due to high demand.

"I have tried three times to apply for the PR1MA homes, but so far nothing yet," said Mr Caden Ng, a sales executive from Petaling Jaya, Selangor who earns about RM3,500 a month.

Cognisant of the medium-income group’s plight, both BN and the opposition Pakatan Harapan (PH) pact have come up with several pledges in their election manifestos to address the issue.

In BN’s manifesto, the coalition promises to establish a bank dedicated to facilitating loans for houses priced RM300,000 and below. It has also offered tax incentives or development funds to encourage banks and housing developers to offer rent-to-own schemes.

“That’s why we need continuity. What if there’s a change in the future? History has shown that every time there’s a new government, they will dismantle whatever their predecessor did,” said former Johor assemblyman Tengku Putra Haron Aminurrashid Tengku Hamid Jumat.

“That will be disastrous for the development of a certain state or the nation.”

Mr Gan Ping Sieu, a leader of the Malaysian Chinese Association, a senior BN partner, said that other institutions - besides the government - have a role to play in helping the medium-income buy homes.

Banks for instance can play a part by extending loan financing beyond the current maximum limit of 35 years, he said.

"Buyers should be allowed to pay until they die and if there is any balance of the loan left, their families can take over the repayment," he added.

As for PH, it has pledged to build one million affordable homes across Malaysia within two terms of a PH government and to create a special housing loan scheme tailored to youths wishing to buy their first property.

In Selangor - a state under PH - the administration of Chief Minister Azmin Ali had introduced a Rumah Selangorku scheme in 2015, which to date, has built 24,834 homes for the B40 and M40.

The scheme is a collaboration with private developers to build homes priced between RM42,000 and RM250,000.

"Last year, we targeted to build 15,000 homes but we exceeded the target by 3,000 units,” Selangor executive councillor Teng Chang Kim told TODAY.

“The good response is because the state government gave incentives to developers such as 10 per cent discount on land premiums."

Still, some Malaysians are not hopeful the situation will improve.

Mr Zafri Samugam, 29, an auxiliary police officer who works across the Causeway at Singapore’s Changi Airport, has been renting a home in Johor Bahru for the last two years.

The father of one has another child on the way.

While he has spent the last three years looking for a home in Johor Baru to call his own, he said the state capital’s proximity to Singapore, and the growing presence of foreigners including Chinese nationals, have driven up prices.

“Everything is very expensive here,” said Mr Zafri.

Asked what he thought of the political parties’ pledges, Mr Zafri believed the opposition would not make a marked difference on the issue even if it sweeps to power.

But he acknowledged: “I can’t say now. After (the election), then we will know.”

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