The overbuilding of affordable housing is “quite severe” as many developers have shifted into that segment to counter high loan rejection rates, with the oversupply exacerbated by a lack of accurate and  timely property market data, said the Real Estate and Housing Developers’ Association (Rehda) patron and Rehda Institute trustee Tan Sri Eddy Chen

“In fact, we are building everywhere — those affordable houses in the range of RM300,000 to RM500,000. Even in the Federal Territories, Rumawip (the Federal Territories Housing Scheme) is putting thousands and thousands of units into the market. On top of that, the quota for affordable housing is being imposed on developers’ projects.

“So, where is the lack of affordable housing now? It is everywhere. And I would say that the overbuilding in the affordable housing category is quite severe,” he said in his welcome remarks at a sales and marketing conference organised by Rehda Institute in Kuala Lumpur today.

Chen pointed out that one of the biggest challenges for developers is “putting the right product in the right location with the right pricing to match market demand”, which has not been easy in the past few years due to high loan rejection rates.

Developers can avoid such overbuilding with timely and accurate property market data, he added.

“Other than the slow income growth that is not catching up with the house prices and cost of living, there is the issue of the access to timely and accurate information.

“In this era of big data, we would like to see the data [on the property market] being collated in such a way that is useful and helpful [for developers]. It is not rocket science to get all these things together and package them altogether into timely and accurate information, which developers can rely on to build all-round products and probably avoid the never-ending overbuilding in the wrong location,” he said.

Read more: EdgeProp.my

BNM: Rehda’s definition of affordable house price is inaccurate

Bank Negara Malaysia (BNM) said yesterday the definition of affordable houses quoted by the Real Estate and Housing Developers’ Association (Rehda) as being in the price range of RM300,000 to RM500,000 is inaccurate.

“Houses in the price range of RM300,000 to RM500,000 are beyond what is affordable to the households earning the median income in Malaysia,” it said in a posting on factwatch.my yesterday.

The central bank was responding to a news article by EdgeProp.my which quoted Rehda patron and Rehda Institute trustee Tan Sri Eddy Chen as saying that the overbuilding of affordable housing has become “quite severe” as many developers have shifted into that segment to counter high loan rejection rates, with the oversupply exacerbated by a lack of accurate and timely property market data.

BNM pointed out that based on international standards using the Housing Cost Burden approach, the maximum price of an affordable home is estimated to be only RM282,000, given the median household income of RM5,228 in 2016 as published in the Household Income and Expenditure Survey by the Department of Statistics, Malaysia.

BNM also said there remains a mismatch between the profiles of new housing supply and demand by households.

“According to the fourth-quarter 2017 data by National Property Information Centre (Napic), only 39% of new housing launches were priced up to RM300,000 over the years 2016-2017. This is insufficient to cater to the demand by 50% of households in Malaysia earning up to the median income.

“Napic data also suggests that the issue of unsold affordable homes priced below RM300,000 is the least severe compared to other price ranges. As at fourth quarter of 2017, unsold residential units priced below RM300,000 constitute the lowest share (20%) of total unsold residential properties under construction in Malaysia (RM300k-500k: 35%; above RM500k: 45%),” noted BNM.

“Beyond prices of new launches, equally important are other aspects of what constitutes an affordable home such as connectivity from centres of employment, sufficient living space,” it added.

Read more: EdgeProp.my