Era of cheap houses gone forever — Lim Mun Fah
AUG 17 — Housing and Local Government Minister Datuk Seri Chor Chee Heung agreed with the government’s decision to increase low-cost housing prices as it now requires at least RM120,000 to build a low-cost house.
The message is clear enough, namely the era of cheap houses is gone forever!
Housing prices have been steadily rising this year. In addition to Kuala Lumpur and Penang, even Johor Baru, where housing prices had been stagnant for 10 years, is now facing the same problem.
When housing prices fell in 1987, townhouse prices on the outskirts of Johor Baru plummeted to about RM50,000. However, RM50,000 is not enough to buy even a second-hand low-cost house 25 years later.
Many townhouses on the outskirts of Johor Baru now cost over RM200,000 per unit. A few years ago, we might still be able to buy a double-storey townhouse in Skudai for RM200,000. But nowadays, the price of the same townhouse has soared to RM600,000 or even higher.
There are many factors behind the price hike. In addition to inflation, soaring building materials, wages and land prices are also important causes. Of course, speculation and the intervention of foreign buyers are playing a role here, too.
The government’s low-cost housing policy has been implemented for decades. In the early days, the low-cost housing allocation was controlled by political parties. Poor people who were not backed by political parties would have to pay under-the-table money to get one.
Nevertheless, we must admit that the policy has benefited low-income earners, making many people’s dream of owning a house come true.
However, the conditions to apply for low-cost houses are very harsh. Only those with household monthly incomes not exceeding RM2,500 are eligible to apply. Single people who earn even less than RM1,000 per month are not eligible.
This is followed by another problem, namely the so-called middle-income families are caught in a plight as they are not eligible to apply for low-cost houses while they cannot afford houses in the open market. Moreover, isn’t it a bit too ironic to call families earning a household monthly income of RM2,501 middle class?
Today, middle-class families living in big cities cannot afford a house. Therefore, the government launched the My First Home Scheme for young people earning RM3,000 and below to purchase houses worth up to RM400,000. However, it has become a joke in the eyes of bankers as banks do not approve 100 per cent loans for young people earning RM3,000 or less. Even if banks reluctantly approve the loans, these young people would not be able to repay the loans.
National House Buyers Association (HBA) secretary-general Chang Kim Loong said that if the government does not address the problem of skyrocketing housing prices, it is expected that there will be more people who cannot afford a house in the future, and more social problems will follow.
He is indeed correct; the problem is, how should the government intervene? And what would be the outcome for the intervention? Millions of “middle-income earners” can just sigh helplessly and wait to see what happens next! — mysinchew.com
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.