Budget 2016 – Address the need for affordable housing

Budget 2016 - Address the need for affordable housing

Kuala Lumpur, 24th October 2015 – Commenting on Budget 2016, the first budget under the 11th Malaysian plan, iProperty Group’s Chief Executive Officer and Managing Director, Georg Chmiel said that Budget 2016 addressed the issues of affordable housing.

“There were however, no measures introduced to control the escalating property prices in the country,” shared Chmiel.

Based on a survey conducted by iProperty.com Malaysia, the country’s No.1 property website, prior to the Budget 2016, 41 per cent of respondents revealed that they wanted the government to ensure better control on property prices.

“Respondents rated the current affordability level of property prices in the country at 7.6 (1 being very affordable and 10 being not affordable at all). It was interesting to see that Budget 2016 did not introduce any new measures to address this concern but certainly addressed the issues on affordable housing and also better public transportation There were no changes to the Real Property Gains Tax (RPGT), stamp duty as well as more stringent regulations imposed on foreign purchasers wanting to purchase property in the country,” added Chmiel.

Lauding the government for introducing more schemes to meet the rising demand for affordable housing, Chmiel said that the measures introduced in relation to this will be helpful for first time buyers looking to get into the property market.

 

More Affordable Housing

“Under Budget 2016, the government announced that it will be looking at building over 300,000 units of affordable housing under the various housings schemes. Under PR1MA, the government will be looking at selling 175,000 units, scheduled to be completed next year, below 20 per cent of the market price,” shared Chmiel.

Perbadanan PR1MA Malaysia (PR1MA) has to-date approved 153,000 units of affordable houses to be built in 110 locations nationwide, expect in Labuan, and is targeting to have another 250,000 units of affordable housings to be approved by the end of the year 2015.

As of July 2015, PR1MA has already received a total of 1,016,000 applicants. These homes are priced at between MYR100,000 and MYR400,000, with the average cost being between MYR250,000 and MYR300,000.

Chmiel added that by selling the properties 20 per cent cheaper will be a great help to first time home buyers wanting to get into the property market.

“The introduction of the First Housie Deposit Financing Scheme under Ministry of Urban Wellbeing, Housing and Local Government, to assist first time home buyers of affordable houses to pay the deposit was also a move in the right direction, although more details of the qualifying process needs to be outlined. With this, first time home buyers now have the opportunity to own a home,” shared Chmiel.

 

Better Locations, Transportation and Infrastructure

He shared that one of the other wishes that survey respondents had were affordable housings to be built in strategic locations with good public transportation.

Under Budget 2016, the government announced that it will build 5,000 units of PR1MA and Perumahan Penjawat Awam 1Malaysia (PPA1M) in 10 location in the vicinity of LRT and monorail stations, including in Pandan Jaya, Sentul and Titiwangsa.

“There is a strong demand for affordable residential properties in major urban centres. These are strategic locations and will certainly see first time home buyers wanting to get their hands on properties in these areas. Hopefully, in the near future, the government will look at building more affordable housing in other strategic areas to meet this demand,” shared Chmiel.

Chmiel urged first time buyers to submit their applications as soon as it is made available to not miss out on the opportunity as there are only 5,000 units.

He also commended the government for introducing various measures to address the issue of better public transportation in the country with the building and improving of the rail transport network and highways in 2016. These include the highways of Damansara – Shah Alam, Sungai Besi – Ulu Klang, Pulau Indah and Central Spine Road. To reduce traffic congestion in Kuala Lumpur, RM900 million is provided to implement the Jalan Tun Razak Traffic Dispersal Project through a strategic public and private partnership.

He concluded saying, “The Budget 2016 addressed has certainly made it easier for first time home buyers to own a home. Even though the Developer Interest Bearing Scheme (DIBS) was not reintroduced and no new measures were introduced to curb the escalating house prices, the government did introduce other measures to make it easier for first time home buyers to get into the property market.”

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