More to affordable housing than just pricing, Putrajaya told

The National Housing Department is reclassifying property prices following the recent revision of the poverty line.

PETALING JAYA: An economist has urged Putrajaya to introduce an affordable housing index that captures enough data to enable a clear understanding of the housing situation.

Carmelo Ferlito of the Centre for Market Education said the index would be of limited use if affordable housing was seen only from the price perspective.

He was commenting on an announcement that the National Housing Department was reclassifying house prices against a new classification of households following the recent revision of the poverty line.

Ferlito said the review was likely to result in an increase in the number of people qualifying for government housing initiatives like the People’s Housing Project.

Carmelo Ferlito

“It may also see more people qualify to buy affordable homes under the various government schemes,” he told FMT.

However, he said, it would not solve the housing problem.

“A property may be considered affordable because of its price tag, but it may not be desirable. It may be cheap but far away from jobs or schools,” he said.

Ferlito said there was a need for an index that would factor in concerns such as size, location and connectivity.

Such an index would help ensure the building of marketable affordable houses.

He also said the government should stop being a housing developer and allow the private sector to build affordable houses.

He proposed that Putrajaya play the role of subsidiser of rents for affordable properties instead

“It can determine the amount of units reserved for people who are eligible for the subsidy. Once the quota is filled, the developer can sell or rent the remaining units at market prices.”

Ferlito said this would improve the viability and sustainability of housing projects and at the same time promote social mobility.

A developer, who declined to be named, said the revision of the poverty line income meant that more people could now qualify for affordable housing.

But he also said the government must look into the factors affecting the cost of building affordable houses, such as the different requirements set by different state governments.

“For example, some states have a high Bumiputera quota and this means developers need to take into account the discounts given,” he said.

The developer mentioned two other factors: land conversion premiums, and costs incurred by developers in laying the last mile of connections to utilities.

He said these factors must be addressed in deciding on an affordable housing policy.