News & Articles Penang affordable housing glut?
Penang affordable housing glut?
23 Jun 2015
Housing dilemma: Affordable homes on Penang island. A total of 34,608 units, targeted exclusively at the first-time home ownership market with prices ranging between RM200,000 and RM400,000, will enter the property market in Penang over the next three to four years.(“There will be an oversupply of affordable properties, resulting in such projects being abandoned or not taking off at all,” Rehda Penang chairman Datuk Jerry Chan(inset) told StarBiz.)
GEORGE TOWN: Penang property developers see a glut swelling in the affordable segment, which has about RM7bil worth of mid-range properties planned to date.
These 34,608 units, targeted exclusively at the first-time home ownership market with prices ranging between RM200,000 and RM400,000, will enter the property market over the next three to four years.
Some 15% of the 34,608 units are in the RM200,000-RM300,000 range, while the rest are at the RM300,000-RM400,000 range.
The state government’s income eligibility limit of RM8,000 for a RM300,000 unit and RM10,000 for a RM400,000 unit is slowing the take-up rate of affordable properties, according to the Real Estate & Housing Developers’ Association (Rehda Penang).
“Prospective buyers are ineligible to buy because their salaries exceed the RM8,000 and RM10,000 gross household income limit.
“Many are also barred from buying because they already own a property, because they cannot get a bank loan, and because they do not live in Penang.
“So what happens if the eligible buyers endorsed by the state government fail to qualify for the necessary bank loans?
“There will be an oversupply of affordable properties, resulting in such projects being abandoned or not taking off at all,” Rehda Penang chairman Datuk Jerry Chan told StarBiz.
He said a solution is to allow developers to sell the units in the free market to ‘unqualified buyers’.
“However, to curb speculation, the state government must require the ‘unqualified buyers’ to hold the properties for a specific period before they are allowed to sell it in the market,” Chan added.
Rehda deputy chief Datuk Toh Chin Leong said that if affordable properties were to enter the free market, the sale must be regulated to prevent another round of speculation that would impact secondary property sales.
“More than 30,000 new affordable units will enter the market in the next three to four years to compete with secondary properties,” Toh added.
Of the 34,608 units, some 20,950 are planned for the island, of which 830 ares to be built by the state government, and the remainder by the private sector, involving 12 developers.
The other 13,658 units are planned for Seberang Prai, concentrated largely in South Seberang Prai, Central Seberang Prai and North Seberang Prai.
Penang Institute fellow and urban studies head Stuart Macdonald said the affordable housing prices of RM300,000 to RM400,000 on the island was still too high for the average household with a yearly income of RM60,000, based on the 2012 Household Income Survey.
Macdonald said the price of an affordable unit should be between RM180,000 and RM240,000, three to four times of the average household yearly income, which is in accordance to the international benchmark pricing for an affordable housing unit.
Ideal Property Group executive chairman Datuk Alex Ooi said due to the rejection rate of bank loans hovering at 30% to 40%, the group finds it hard to sell the 4,840 units under the One Foresta and I-Santorini affordable schemes, priced between RM300,000 and RM400,000, launched recently.
“Over 90% of the buyers are in the late 20s or early 30s.
“Their gross household income, if they are married, hovers around RM6,000.
“If they take up a loan for 35 years, they have to service an interest payment of RM1,700 per month.
“With other commitments such as car loans, most of their salaries would go to servicing loans.
“The bank loan rejection rate for this income group is the highest,” Ooi said.
Ooi said the state government should revise those policies hindering the sales of affordable homes.
“There are first-time house buyers who qualify for bank loans, but because they stay in overseas or in another state, they are prevented from buying.
“The group has made plans to implement 10 projects with affordable components for the group’s 288 acres land bank on the island,” Ooi added."
GEORGE TOWN: Penang property developers see a glut swelling in the affordable segment, which has about RM7bil worth of mid-range properties planned to date.
These 34,608 units, targeted exclusively at the first-time home ownership market with prices ranging between RM200,000 and RM400,000, will enter the property market over the next three to four years.
Some 15% of the 34,608 units are in the RM200,000-RM300,000 range, while the rest are at the RM300,000-RM400,000 range.
The state government’s income eligibility limit of RM8,000 for a RM300,000 unit and RM10,000 for a RM400,000 unit is slowing the take-up rate of affordable properties, according to the Real Estate & Housing Developers’ Association (Rehda Penang).
“Prospective buyers are ineligible to buy because their salaries exceed the RM8,000 and RM10,000 gross household income limit.
“Many are also barred from buying because they already own a property, because they cannot get a bank loan, and because they do not live in Penang.
“So what happens if the eligible buyers endorsed by the state government fail to qualify for the necessary bank loans?
“There will be an oversupply of affordable properties, resulting in such projects being abandoned or not taking off at all,” Rehda Penang chairman Datuk Jerry Chan told StarBiz.
He said a solution is to allow developers to sell the units in the free market to ‘unqualified buyers’.
“However, to curb speculation, the state government must require the ‘unqualified buyers’ to hold the properties for a specific period before they are allowed to sell it in the market,” Chan added.
Rehda deputy chief Datuk Toh Chin Leong said that if affordable properties were to enter the free market, the sale must be regulated to prevent another round of speculation that would impact secondary property sales.
“More than 30,000 new affordable units will enter the market in the next three to four years to compete with secondary properties,” Toh added.
Of the 34,608 units, some 20,950 are planned for the island, of which 830 ares to be built by the state government, and the remainder by the private sector, involving 12 developers.
The other 13,658 units are planned for Seberang Prai, concentrated largely in South Seberang Prai, Central Seberang Prai and North Seberang Prai.
Penang Institute fellow and urban studies head Stuart Macdonald said the affordable housing prices of RM300,000 to RM400,000 on the island was still too high for the average household with a yearly income of RM60,000, based on the 2012 Household Income Survey.
Macdonald said the price of an affordable unit should be between RM180,000 and RM240,000, three to four times of the average household yearly income, which is in accordance to the international benchmark pricing for an affordable housing unit.
Ideal Property Group executive chairman Datuk Alex Ooi said due to the rejection rate of bank loans hovering at 30% to 40%, the group finds it hard to sell the 4,840 units under the One Foresta and I-Santorini affordable schemes, priced between RM300,000 and RM400,000, launched recently.
“Over 90% of the buyers are in the late 20s or early 30s.
“Their gross household income, if they are married, hovers around RM6,000.
“If they take up a loan for 35 years, they have to service an interest payment of RM1,700 per month.
“With other commitments such as car loans, most of their salaries would go to servicing loans.
“The bank loan rejection rate for this income group is the highest,” Ooi said.
Ooi said the state government should revise those policies hindering the sales of affordable homes.
“There are first-time house buyers who qualify for bank loans, but because they stay in overseas or in another state, they are prevented from buying.
“The group has made plans to implement 10 projects with affordable components for the group’s 288 acres land bank on the island,” Ooi added."
Source: The Star Online