Affordable ways of housing our nation

Last month, readers of this column were “brought around the world” to discover some exemplary public and affordable housing policies implemented in other countries. There are some interesting ideas that were derived from this exploration, which can be enlightening towards building affordable homes for our nation.

Hong Kong, Singapore, London and Australia have their own success stories with regard to building affordable homes. What they share in common is strong enforcement of policies with stringent rules.

Applicants applying for public housing in Hong Kong are required to undergo comprehensive credit tests covering the applicant’s income and assets.

In Singapore, the Housing and Develop­ment Board (HDB) flat owners-to-be are not allowed to own other properties in Singapore or in other parts of the world.

In London, applicants who wish to purchase a council house must own it as their only home and use it for owner occupation.

The Australian government came up with innovative ideas to increase the supply of affordable homes by offering financial incentives to individuals or entities to build and rent houses at 20% lower rental rate to moderate and low income earners.

It is statistically proven that these countries have reaped the benefits of their own respective methods. The question that now begs an answer is: What policies or housing models should we adopt to successfully house our own nation?

To deal with housing issues that involve population growth, income and development levels, there is no one model that fits all. What we can do is to learn from successful models and customise them to meet our requirements. It would even be better if we could successfully come up with our own model.

Earlier this year, our government set a goal to deliver one million affordable and low-cost homes to the public within the next five years. This is equivalent to an average of 200,000 homes annually. An institution, 1Malaysia People’s Housing (PR1MA) was set up primarily to build affordable homes and has been reported to have targeted 80,000 homes in the first year with slightly over 100,000 in the subsequent years.

The vision to build affordable and low-cost homes is applauded. Yet, questions of how it is to be achieved remain real. For instance, where should these houses be built? How to make these houses affordable to the rakyat? What regulations need to be put in place to ensure affordable housing is only owned by deserving families?

Universally, public housing is subsidised by the government due to cost and resource considerations. Land, for example, is the most crucial element in any housing development. Scarcity of land leads to costly land prices, especially in the city. The price of materials to build homes has increased over the years.

Therefore, without some form of government incentive or subsidy, it is virtually impossible for private developers to sell affordable, let alone low-cost homes.

The government can materialise its vision by providing aid in other forms. Since a lot of land resources are owned by the government, it can offer subsidies or incentives to private developers to use the land for public housing development.

Certain land belonging to government agencies, such as the Rubber Research Institute (RRI), are very large and strategically located and are among the potential areas that the government can consider releasing to build affordable homes.

Another good policy would be to encourage the development of new townships in outlying areas rather than focusing on already developed and highly populated areas. Not only are these lands considerably cheaper, it would also alleviate the burden of over-crowded cities.

The government can build transportation infrastructure, including fast commuter rail and MRT along with other amenities such as schools and commercial hubs, to allow these new townships to prosper.

Besides looking at ways to build more affordable homes, addressing the delivery of the homes is equally important. PR1MA targets to deliver homes with prices ranging from RM100,000 to RM400,000 to the middle class with an average monthly household income of RM2,500 to RM7,500.

According to the information published on its website, PR1MA homes must be owner occupied, and a 10-year moratorium will be imposed, in which the property cannot be sold or transferred to another party without prior approval.

Additional consideration should include devising a comprehensive mechanism to determine qualified applicants and whether to impose any restriction on owning other property before applying for a PR1MA house.

The recommendations shared thus far are among the ideal policies and guidelines the government should consider seriously if it is to achieve its vision of housing the nation. The next critical success factor is to ensure the policies and guidelines are strongly enforced without any leakage that may sabotage the vision and leave deserving families in the lurch.

FIABCI Asia-Pacific Regional Secretariat chairman Datuk Alan Tong has over 50 years of experience in property development. He is also the group chairman of Bukit Kiara Properties. - By Datuk Alan Tong (The Star)


July 14, 2013 at 1:29 AMT J

Excellent article. Public Housing was introduced in Hong Kong in the '50s when it was realised how dangerous squatting is for squatters and government / business. One of the excellent things about Government subsidised Public Housing in Hong Kong is the infrastructure built in with the housing. Cheap food , meat , fruit and veg markets, good , cheap and frequent transport to work areas . Good government public housing management of the Housing Estates , unlike what I see in Penang cheap housing estates. A NGO works with government financial and land support to provide apartments for middle class families on low incomes .
Unfortunately, unlike Singapore, the apartments for families ( often 2-3 children) are small .. Sometimes as small as 300 sq ft

July 14, 2013 at 11:53 PMcondomana

Hi T J,

Any thoughts on what Penang needs in terms of affordable housing? Has the state gov done enough? If not, what should they have done?