Ideas For Housing

Housing in an area of national development I feel strongly for and with the advent of Malaysia Baru, I hope government may have stronger political willpower to address housing issues which have been addressed somewhat unsuccessfully by the previous administration.

Khazanah Research Institute and Bank Negara individually have conducted a thorough as-is analysis of the housing/affordable housing situation, both providing well thought solutions to address the situation. I would like to provide additional ideas to the ones provided by KRI and BNM:

1. Revitalizing community centers

Community centers in Malaysia is an underutilised asset. Every constituency has it but it is used mostly for badminton or weddings.

A good neighborhood design is one that facilitates interaction – a community center needs to do exactly that, to enable frequent interaction.

In Singapore, community centers are being transformed. The concept is as follows: lots for F&B are added to community centers. There will be an anchor tenant (usually McD or Starbucks as it brings the crowd) but other tenants are given a ceiling price per item for them to sell. The idea is simple – if you live in an affordable house but don’t have affordable food to go to, it’s not really an affordable lifestyle or community. Community centers is also a place for people to teach and learn skills, from casual to proficient. Have a piano for people to teach and learn, hall for tae kwon do and halls for free movie. As how the economist Raj Chetty mentions, good neighborhoods enable upward mobility, making our community centers more useful is a good first step.

Pictures from Tampines West Community Club, as an example:

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Starbucks on Ground Floor with more F&B outlets on 1st Floor
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Sports court which doubles up as a Screening Hall

2. Policies to reduce construction cost

Buying a home is much like buying anything, it is a function of two things: the price of the item and how you pay for it. From the media engagements with the new minister, a lot of focus is given to fixing the latter – working with MOF and BNM on fixing loan eligibility, encouraging Rent-To-Own. More needs to be done to address how you drive sale price down – and as developers simply push cost to customers, asking how stakeholders can drive construction cost down.

Affordable housing in Malaysia is a cross-subsidy model. What this means is developers make a loss building and selling affordable homes but make their profits from building commercial/service apartments on adjacent plots. For the government to deliver 1 million homes, this model cannot work. Developers need to innovate to be able to build and sell homes at ~RM250,000 and still make a profit. To complement innovation, the government needs to assist to drive construction costs down via addressing policies that push costs up.

Compliance cost needs to be addressed and reduced for affordable housing projects: statutory costs to CIDB, IWK, TNB, Syabas should be reduced. Different states also charge various costs differently – this should be reduced and standardized. State governments need to reduce land premiums, standardize cemetery cost and contribution to Improvement Service Fund should be waived.

The other area which requires standardisation is planning requirements. The final say on most matters lie with local authorities which makes standardisation difficult. One planning guideline that needs to be addressed is number of car parks. Certain local authorities require 1.5 bays per unit with 10% of total bays for visitor carpark. Car park bays are expensive – on a podium, it could cost ~RM35,000 per bay. If the government provide public transport infrastructure (which is in line with PT modal split targets), reducing car park bays to 1 bay for 1 unit would enable cost reduction.

 

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