Housing is not a commodity. Remove it from the free market!

on

In the year 2018, Menteri Perumahan YB Zuraida has previously reported that the total worth of houses that have not been sold is at an estimated RM22.5 billion! Why does a scenario like this exist when the need for housing is still critically needed amongst the Malaysian rakyat? If there are still many amongst the rakyat from the lower income (B40) and middle income (M40) who have yet to own a house, then why does the value of the stock of unsold houses remain extremely high?

Houses that have been categorised as “affordable” (Mampu Milik) are, as a matter of fact — unaffordable — by the majority of the rakyat. The ability to afford a house is usually estimated by calculations of an individual’s income. If they earn RM2,000 a month, they can only afford a house 3 times the price of their yearly salary of RM2,000 x 12 x 3 — which is RM72,000. 

So what is the rationale of setting the price of affordable housing at around RM250,000 to RM500,000? According to research on the earnings of Malaysians, Ketua Perangkawan Malaysia, Dato’ Sri Dr. Mohd Uzir Mahidin, reports that the median value of salary and wages per month in the year 2017 was RM2,160, while the average was RM2,880. If we calculate with an average of RM2,880, the cost of affordable housing should be RM2,880 x 12 x 3, which is RM103,680. It is also reported that the number of workers receiving this amount is around 8.6 million — a percentage of 57.3% from the total work force of 15 million workers throughout Malaysia.

https://www.bharian.com.my/bisnes/lain-lain/2018/05/422762/penengah-dan-purata-gaji-di-malaysia-meningkat

If taken into account not only the income of the individual, but also household income as a whole, is it then enough to afford a house? In the 2018 Housing Conference, Ketua Pengarah Jabatan Perumahan Negara N. Jayaselan stated that the median household income in the year 2016 is RM5,228 — or as much as RM62,736 per year. In 3 years, it would only be RM188,208, which would still be far from the average price of a house which is now RM400,000.

However, housing developers would argue that it is impossible to build a house within the price of RM70,000 to RM100,000, with the excuse that the price of raw materials, machinery rentals, compliance costs and land costs have increased.

Housing for the rakyat should not be analysed based on building cost which is affected by market factors. Building and supplying affordable housing is the responsibility of the government to subsidise and it should not be tied in with the impacts of the free market.

In the 1980s, the government tried to implement supplying affordable housing with the help of private entities. The quota for the amount of low-cost houses that had to be built in a mixed development building was set to 30%. The cost to build these houses would be borne through ‘cross subsidy’, with luxury housing and commercial projects that would be developed under the same project.

Unfortunately, the government eased the conditions of the quota, as they were fooled by the arguments of the developers, including their disinterest in building low-cost housing in locations of ‘prime areas’. Therefore, they were given leeway to fulfil this 30% obligation in remote locations located far away from the city. It resulted in the arising issue in which 30% of the quota for low-cost housing was being sold at the price of RM42,000. This is because the rakyat usually scout for jobs in urban areas. So, it wouldn’t make sense for them to be forced to buy houses in far away locations such as places like Bukit Beruntung or Rawang if they work in Lembah Klang. These people definitely do not have the means to cover the cost of transport, as well as to handle the stress of having to go back and forth from their workplace.

Consequently, the urban area and its suburbs have become exclusive locations for the development of luxury properties which costs millions of ringgit. It’s as if the rakyat, of which a majority consists of the working class, are being evicted from the city. They can only afford to dream of buying a house in the city — but in reality, they are forced to rent just to survive, despite the fact that they contribute to the daily workforce in various service and manufacturing sectors in the city and the suburbs as working class people.

Developers who managed to influence the government to exempt the 30% quota have also apparently deleted the phrase ‘low-cost housing’ from the dictionaries of the government. Instead, the term ‘Affordable Housing’ has taken its place. Although ‘Affordable Housing’ sounds nice, the irony of it is that the price of housing from RM250,000 to RM500,000 is actually unaffordable for the ordinary rakyat.

KPKT (Kementerian Perumahan dan Kerajaan Tempatan) refused to address the principal issue of the ever-increasing housing prices, but instead acted adversely to loosen the terms of acquiring a house loan with the hope that more people could afford a house. But if the principal issue i.e. the price of the house is not resolved, the bank’s debt burden of RM250,000 to RM500,000 will be borne for life by the rakyat. If they fail to pay, the house will be auctioned. Housing rights will again be seized by the free market when the house is auctioned off and sold on the free market to the highest bidder.

Thus, the National Recovery action plan #RakyatMintaLima of PSM suggests that the government should take over the responsibility of providing first homes for the rakyat from the private sector. Hence, all the influence of market factors such as land price, land value evaluation and so on, can be avoided or controlled from affecting the cost of housing. The cost of land should be absorbed by the state government and the costs of changing the land conditions, compliance with the developer’s licence, planning and development approval can be minimised at the level of the local authority and the National Housing Department.

The various costs that increase the cost of housing, if private developers develop them, can be avoided. And housing can be offered to the people at less than RM100,000 in urban and suburban areas.

Speculation in the housing market should also be controlled by imposing higher taxes on the ownership of three or more homes. If a house is left vacant for more than three (3) months, then a penalty should be imposed. This is so that the number of houses purchased — not for the purpose of inhabiting them — but solely for the sake of investment, is reduced.

A. Sivarajan
Secretary-General
Parti Sosialis Malaysia

Leave a Reply

Your email address will not be published.