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Great problem Penang; too many affordable homes, soon.

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Reported in an English daily, Penang would soon have way too many affordable homes. When there were not enough, everyone shouted and wanted more units made available. When there are now up to 34,608 units worth RM7 billion coming up within 3 to 4 years, suddenly there’s way too many? According to the report, 15% of the 34,608 units being built are for RM200,000 – RM300,000 while the rest are all the RM300,000 – RM400,000 range. According to REHDA, two major reasons why these units were still available is because of the income eligibility limit. It’s way too low. Many of the prospective buyers could not buy because their salaries have exceeded the RM8,000 and RM10,000 gross household limit. The rest were barred because it was not their first property, could not get a bank loan or they do not live in Penang.

Allow me to question a bit on some of REHDA’s reasoning. Any reason why those who already have a property be allowed to buy these affordable units again? Aren’t these supposed to be for those who could not afford the high property prices and needed them in the first place? Second question, if they do not live in Penang, WHY would they be allowed to buy these affordable properties? They should at least work and stay in Penang. No? Also, I seriously am not sure why many of the prospective households with RM10,000 or higher incomes did not yet buy a property? Even though the newer ones are expensive but there were still secondary choices. Or are they really waiting for the next financial crisis to happen? If they were all waiting for the affordable homes, then I think they should get it soon. Hopefully, they have registered.

What happens when these affordable properties were not taken up? Simple. If the developers continue to build, there would be huge oversupply or the developer may choose to just abandon the project or not to start at all. If there are oversupply, this is actually healthy for the overall market. The buyers may have opportunity to get a cheaper property than currently. One solution proposed by REHDA Penang chairman Datuk Jerry One is to allow the developers to sell the units in the free market to ‘unqualified buyers.’ Of course these ‘unqualified buyers’ must be compelled to hold the property for a number of years before being allowed to sell. I personally have no issue with this suggestion. If they are really building and there are no takers, then why not sell to those who are interested but do not qualify?

The only thing that I think the state government should do is to really understand what the real need is. Are there really a huge oversupply of affordable homes? If there are because these affordable homes are still NOT affordable enough, would it not be better to speak to the developers before they start selling or building? Readjust the pricing so that the lower income Penangites could afford them. Awaiting the response or actions. 34,608 units are huge and early intervention is necessary before everything gets worse. It’s a good problem though; too many affordable homes.

written on 22 June 2015

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