More and affordable housing are needed in Malaysia

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An article was widely shared recently. The main headline was that “8 million more houses needed in Malaysia.” This is based on the 30 million population and a ratio of 4 to 1 home. The article further stated that as of today, Malaysia has around 4.7 million homes. Thus, you can see the huge gap between the actual needed versus the actual built ones. Actually, how many homes do we need in Malaysia? Majority of the answers are around 100,000 per year. Well, truth is, we have yet to build up even this level. This explains why many are saying the reason why property prices will continue to increase is because there’s way too few homes being built.

The number of “easily affordable” local authority areas across England has fallen from 72 to just one over the last 16 years. In prime areas, house prices reach as high as 32 times the average earnings of their residents. Frances O’ Grady, the General Secretary of TUC which represents 6.2 million working people in the UK, called for an “ambitious programme” to bring the prices of homebuilding under control. This resonates with the earlier comments made by the governor of the Bank of England (BoE) Mark Carney who said in May that the only long-term way to effectively bring down home prices is to build more homes. In the UK, 63.8 million people lived in 26.4 million homes in 2012. This works out to about 2.4 persons per house. There were calls for more homes even with such healthy ratio. Australia, which has a population of 21.5 million in 2013, has 9.1 million occupied houses or 2.4 persons per house. In UK, the ratio is now 2.4 persons to one house.

Malaysia's population is growing steadily, primarily in the middle-income segment, leading to high demand for good-quality, affordable housing that can accommodate the needs of growing families. Greater KL alone would have over 10 million population. This meant that the homes in the small towns may not be needed or even some may be abandoned once the young ones move to cities. The new homes to be built would thus have to be heavily skewed towards this trend. In fact, when you travel to smaller towns, I think the ratio of home is much lower than 4 : 1. The reason being, there’s just not that many population to go around with the existing number of homes. It might have been even 10 : 1 in the same home long time ago (during my father’s times) but today, perhaps just 2 : 1 or even lower. If the kids made it big in the cities and love their parents and can care for them, this would meant that even that their home in the village or small town would be sold off or just left empty. Malaysia only managed to build about 73,000 residential units per year for the last three years.

”Affordable” and “moderately unaffordable” homes are defined as costing below three times, and between 3.1 and 4.0 times one’s annual household income respectively, according to the housing affordability rating recommended by the World Bank and the United Nations. Under Budget 2015, it is encouraging to note that the Government plans to build 80,000 units under PR1MA and 63,000 units under another housing programme. This will bring the total planned units to 143,000. Developers are strongly encouraged to implement their projects in a mixed population area to facilitate the wants and needs of both the bumiputra and non-bumiputra populace.

This figure is still way too low and the Government should consider building at least 200,000 units a year to meet the vision of one million affordable homes. There should be a constant effort to track the progress of home-building. It is important to realise the goal of housing the nation by ensuring yearly targets are met. Government can consider some measures including freeing up state land for housing, purchasing agriculture land for development, building houses in rural areas and connecting them to the cities via public transports, as well as expediting the approval process to supply more houses to the market. In addition to supplying more affordable homes to bring down prices of homes, there are also other factors to ensure that the rakyat have a roof over their heads.