How 3 Countries Deal With The Problem Of Affordable Housing


Your house is your roof and shelter, and the place where you lay your head at night, as well as where you store precious material possessions. Your house provides a personal feeling of comfort, luxury, prestige and identity. In that sense, home ownership is a basic right.

However, in recent years, Malaysians are finding it a struggle to own a home. With the property market flourishing, prices of houses have sky-rocketed, especially the ones in the urban areas. Malaysians have resorted to renting or buying homes in the out-skirt of the city, and then waste hours in commuting to and fro to their work in the city.

The Government has initiated many cooling measures to curb property speculation that was driving property prices up. These measures include raising the Real Property Gains Tax (RPGT), raising the minimum property price for foreigners from RM500,000 to RM1 million, and also abolishing the Developer’s Interest Bearing Scheme (DIBS).

On the other hand, to ultimately combat home unaffordability, Malaysia has taken a few measures such as:

Government initiativesDescription
1Malaysia People’s Housing (PR1MA)What does it do?
• To plan, develop, construct and maintain high-quality housing with lifestyle concepts for middle-income households in major urban centres throughout Malaysia.

• Households with a monthly income between RM2,500 and RM10,000.

How much?
• Between RM150,000 to RM400,000
First Home Deposit SchemeThis scheme aims to help affordable home buyers with their down-payments on their first house purchase. If households have their down-payment covered for, it will be easier for them to obtain a bank loan.
Private Affordable Ownership Housing Scheme (MyHome)What does it do?
• Provides a subsidy of up to RM30,000 per low-cost house

• For first-time buyers with a monthly household income of RM3,000
Program Perumahan Rakyat (PPR) HomesPPR allows purchase of new low cost houses, limited to low-income earners of RM2,500 per month and below. Under this scheme, a 650 sq. ft. home is priced at RM35, 000 per unit.
Rent-to-Own (RTO) scheme for PR1MA homesA deferred home ownership scheme especially for successfully balloted applicants of PR1MA homes whose loans were rejected by PR1MA’s panel banks.

Under the RTO scheme, you are eligible to rent the PR1MA home for up to 10 years before deciding to buy it at the end of the fifth or tenth year at a pre-determined price.

Households can choose between: PR1MA Basic RTO or PR1MA Zero RTO.

Monthly payments: Rental + Buyer’s Savings Account (BSA)
• Payment of your monthly rent includes a savings amount. The savings is accumulated towards payment of your house value. If you decide to exit the scheme without purchasing the house, the savings amount will be refunded after deduction of charges owed to PR1MA.

Monthly payment: Rental
• Payment is only for your monthly rent. Rental rates under Zero RTO will be less than that of Basic RTO.
Youth Housing Scheme (YHS)What is it?
• A first-time home ownership scheme

• Married youth aged between 25 and 40 years with household income not exceeding RM 10,000 per month.

• BSN will provide loan up to RM500,000 with a financing tenure up to 35 years or up to age 65, whichever is earlier to the eligible borrower.

• Limited to the first 20,000 buyers only

Other perks
• 50% of stamp duty exemption on the instrument of transfer and loan agreements
• Financial aid of RM200 per month will be given for a period of two years from the date of first disbursement to the developer to aid with loan repayment

Even with these housing initiatives over the years, home affordability continues to be an issue for the lower and middle income groups in the country.

Housing affordability is not a problem exclusive to Malaysia, but it is something that other nations are experiencing too. Here’s how our neighbouring countries are dealing with the problem:



Image from Techinasia

Singapore’s public housing has become a stellar example to other countries, not just in the region, but also the world. It’s public housing has housed an entire nation. Today, more than 1 million flats have been completed in 23 towns and three estates across the island. Housing and Development Board (HDB) flats are owned by over 80% of Singapore’s resident population.

Government initiativesDescription
HDB Loan Eligibility
Flat buyers who would like to obtain an HDB loan to buy a new flat must have a valid HLE letter before purchasing their flat.

The HLE letter considers the buyer’s age, income, and other financial commitments to calculate the maximum loan amount eligible and expected monthly instalments to ensure they are not financially overstretched.
Home Protection Scheme (HPS) HPS helps to ensure that dependants of the flat owners would not lose their homes if they are unable to finance their loan in the event of death or permanent incapacity of the sole breadwinner.
First-time buyersChoose to buy a new or a sub-sale flat.

Eligible sub-sale flat buyers can utilise their CPF Housing Grant to make the initial payment or to reduce the mortgage loan.

These housing grants ease the financial burden of low and middle-income households to afford their first flat.

• CPF Housing Grants
• Additional CPF Housing Grant (AHG)
• Special CPF Housing Grant (SHG)
Couples with childrenSeveral schemes are in place for married couples with children, or couples who are expecting children to buy their first flat.

• Parenthood Priority Scheme (PPS)
Under the PPS, a percentage of the flats under the Build-To-Order (BTO) and the Sale of Balance Flats (SBF) exercises are set aside for first-time buyer families with at least one child who is a Singapore Citizen (SC) under 16 years old. This scheme applies to divorced parent and widowed parent.

• While waiting for their new flats to be completed, they could get temporary housing under the Parenthood Provisional Housing Scheme (PPHS). The scheme benefits married couples, engaged couples, divorced parent and widowed parent.
Couples with married childrenUnder the Married Child Priority Scheme (MCPS), up to 30% of the flats have been set aside for MCPS first-timer families and up to 15% for second-timer families.

Within the MCPS quota, first priority is given to two groups of applicants, namely:
• Parents and married children who apply for a flat to live together under one roof
• Parents who own a flat in a mature estate and apply for a BTO flat in a non-mature estate to live near their married child

• Second-timers can now buy a new 2- or 3-room BTO flat in non-mature estates. The BTO flat distribution quota for second-timers has been doubled to 30%. Of the 30% quota, 5% has been set aside for second-timers who are divorced or widowed with children below 16 under the Assistance Scheme for Second-Timers.
Step-Up CPF Housing GrantHelp families in non-mature estates upgrade from subsidised 2-room flats to 3-room standard flats. Each party in a divorce could apply for a subsidised flat within three years from the date of divorce.
Multi-generation familiesUnder the Multi-Generation Priority Scheme (MGPS), priority allocation is given to parents and their married children who submit a joint application to buy 3-generation (3Gen)’ flats.

Parents can apply for a Studio Apartment or a 2-/ 3-room flat while the married child can apply for a 2-room or bigger flat.
SinglesUnder the Single Singapore Citizen (SSC) Scheme or the Joint Singles Scheme (JSS), eligible singles can buy a new or a sub-sale flat from the open market.

Up to 30% of the 2-room BTO flats offered in non-mature estates are allocated to singles.

Like other flat buyers, eligible singles can enjoy CPF Housing Grants when buying a BTO or resale flat.
ElderlyFor senior citizens who would like to age in a familiar environment, there’s a quota-based Studio Apartment Priority Scheme (SAPS).

Studio Apartments were launched to provide another housing option for those aged 55 and above. These apartments, equipped with elderly-friendly and other safety features, are customised for independent and elderly living.



Image from Wikipedia

Council of Australian Governments (COAG) identified housing affordability as a pressing issue for Australians and has agreed that Governments would work together under the A$1.3 billion annual National Affordable Housing Agreement to improve housing affordability and reduce homelessness and indigenous housing disadvantage.

National Partnership Agreements on homelessness, social housing and remote Indigenous housing complement the National Affordable Housing Agreement.

Government initiativesDescription
The homelessThe National Partnership Agreement on homelessness provides A$1.1 billion to help fund new social housing dwellings and specialist homelessness projects across the country.

The Agreement includes a specially targeted initiative which will create more than 600 new dwellings across Australia for homeless families and individuals.
Low income familiesA$5.6 billion is provided to provide accommodation for people who are homeless or at risk of homelessness.

The Agreement is funding around 20,000 additional public and community housing to meet priority social housing needs.

Also, there have been repairs to existing public housing stock (around 80,000 units have undergone repairs and maintenance).

The National Partnership Agreement on Social Housing provided A$400 million of Commonwealth funding to build almost 2,000 social housing.
Remote indigenous communitiesOver A$5 billion was allocated to build up to 4,200 new homes and upgrades to around 4,800 existing homes.

This will assist in reducing homelessness and overcrowding and will improve poor housing conditions.
Affordable rental housingThe A$4.5 billion National Rental Affordability Scheme (NRAS) is committed to stimulating the construction of 50,000 high quality homes and apartments, providing affordable private rental properties for Australians and their families.

The Scheme aims to address the shortage of affordable rental housing by offering financial incentives to the business sector and community organisations to build and rent dwellings to low and moderate income households at a rate that is at least 20% below the prevailing market rates.
OthersThe National Housing Supply Council monitors housing demand, supply and affordability.

Commonwealth, State and Territory land audits, to identify surplus land that could be developed to provide additional housing.

COAG endorsed a housing supply and affordability reform agenda to build on current initiatives and provide new reform options to decrease the time it takes to bring housing to the market, and to reform government policies that artificially stimulate demand or act as barriers to supply.

Hong Kong

Hong Kong

Image from Randell Tiongson

In Hong Kong, public housing is one of the major housing policies of the government. Nearly half of Hong Kong’s 7.8 million population lives in public housing.

Public Rental Housing estates are the biggest type of public housing estates, and are rented at discounted rates to low-income residents. They are managed by either the Hong Kong Housing Authority or the Hong Kong Housing Society. Low-income eligibility criteria for public rental and subsidised-sale flats vary between families, the elderly and individual applicants.

Government initiativesDescription
Home Ownership Scheme (HOS)HOS estates are subsidised-sale public housing estates for low-income residents, usually built adjacent to or within Public Rental Housing and nearly identical in construction.

They are earmarked for sale to low-income qualifiers at prices which are heavily discounted from market value, and the land value is similarly subsidised.

The mortgage and resale of these units in the second-hand market are likewise restricted to eligible low-income residents. Some blocks are restricted for rental only while some are earmarked for sale.
Tenants Purchase Scheme (TPS)TPS allows existing tenants in the rented public housing estates to purchase their flats. Similar to the HOS, the sale prices are set much lower than the market prices of private flats due to subsidies and restriction on selling.
Flat-for-Sale SchemeFlat-for-Sale Scheme is a housing development scheme where flats under the scheme are for sale at concessionary price.
Sandwich Class Housing Scheme (SCHS)SCHS estates were built for sale to lower-middle and middle-income residents, known as the sandwich class, who did not qualify for low-income public housing under HOS but still had trouble affording private housing.

The quality and market positioning of Sandwich Class Housing were significantly higher than public housing estates and comparable to some middle-class private developments.

These units were sold at slightly below market value and comes with a five-year resale restriction.
Interim Housing (IH)IH is temporary public rental housing for those who are awaiting placement into public housing estates or are not immediately eligible for flats in public housing estates.

IH accommodates residents who have been displaced by disaster, fire, redevelopment or other reasons.

Some of the housing reuse old blocks in public housing estates while others use pre-fabricated building components.

What can Malaysia learn from these?

Malaysia can further look into keeping housing affordable by:

  • Making sure that both existing and planned affordable housing opportunities are well publicised and reach the right people.
  • Stimulate state governments to adopt an affordable housing policy for the states, and to set up their own affordable housing committee, with the goal of creating more affordable housing in their communities. Ideally, these committees should have paid town-funded staffing, a realistic budget, representation from a wide variety of community members (including low-income community members), and clear affordable housing targets and goals that are regularly reviewed and adjusted and in-line with the federal government’s objectives.
  • Advocate for and facilitate passage of local legislation mandating developer fees.
  • Consider creating a real estate tax increment fund. This refers to situations where new development in a community increases overall property values, and therefore property tax revenues. Some or all of the increase can be earmarked for affordable housing.
  • Consider the imposition or redirection of other taxes, fees, or interest payments that could be used to support affordable housing.
  • Have a clear divide of affordable housing for different class of earners or section of the society such as household types, family sizes, and incomes.

The biggest problem facing affordable housing is that as a country we are simply not building enough affordable homes. As a result, waiting lists for Government incentivised housing continue to grow, forcing more and more people to opt to renting instead. It is important that everyone in their lifetime have the opportunity of a permanent and secure home. Safe, secure affordable housing is a basic human need.

As the country tries to bring their revenues and expenditures in-line and prioritize how to spend scarce resources, policy-makers and planners should understand the benefits of well-designed affordable housing programs. Such programs are important now more than ever, as housing affordability has worsened significantly in recent years. The provision of affordable housing involves important social and civic values. Affordable housing is important because the demand is so great and because we want to have quality communities where people can live and enjoy life free from deprivation of basic human needs.

Perhaps, Malaysia can then someday reach the dream of having home ownership at 100%.

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