Affordable units now available to all, but buyers pay extra

Penang’s State Housing Committee chairman Jagdeep Singh announced recently that even those who do not qualify for a unit in an all-affordable housing project can buy these units from the open market. The total units made available for these buyers would be 30% of the total project. These buyers can buy without needing any state government’s approval. The only catch? This 30% open units would be priced 10 percent higher while those in the Northeast District (Georgetown) will be 20 percent extra. These ‘extra’ on top the affordable prices would be returned to the state to help future affordable projects or the rent-to-own scheme.
Penang state government has two all-affordable housing projects which the private sector has nine such projects with a total unit of 8,375. Currently, the low cost units are price-controlled with options from RM42,000 for low-cost units, RM72,500 and RM150,000 for low-medium cost units. Affordable units would be priced at RM200,000, RM300,000 and RM400,000 with minimum sized amenities requirements. When we look at the numbers, I think it’s safe to say that the total number is pretty huge. Is it enough for those who need them?
Well, if the demand is far greater than the numbers that are being built, I am not sure if it is smart to allocate 30 percent of these units to those who do not qualify for them. Perhaps the stigma of owning such affordable units are stopping some of those who qualify from buying a unit? Or are these buyers all having a wait-and-see attitude since the market is slow today?
Another possibility which I think the state government must be very transparent would be, were there any mismatch between the type of units being built versus the type of units being demanded? For example, too many low cost units being built while the demand is more for the affordable ones? If this is happening, the best action would be to change it to follow demand. I am very sure they can learn from the Singaporean government on their HDB projects. They build more when demand is high and drop the numbers being built in slow times.
Last reason may be what I wrote before. Read here: If affordability = low quality What if the buyers are just too worried that these affordable units are of low quality? I think everyone who has been to low cost flats in Malaysia would understand what I meant. If this is the reason, it’s time to quickly finish the first one, show the world that these units are cheaper but just as good. Otherwise, I think the units being planned today are basically going to be empty units. Let’s hope the major reason is due to the slowdown and not the mismatch or the perception. Happy buying your first home.
written on 4th Dec 2015
Next suggested article: 9,999 units promised? Sure, build only affordable and low cost please


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