So how can low-income workers afford to buy homes?
There is real shortfall of affordable housing in Penang, especially on the island.
On the other hand, developers have been falling over themselves to build high-end condos and houses for the upper-middle class, the rich and wealthy foreigners, who are also grabbing choice real estate on the island. For example, at Hillside in Tanjung Bunga, wealthy foreigners are snapping up prime property.
House prices are expected to rise further with the rise in the cost of building materials. But when these new houses and condos are completed, who can afford to buy them? Will we end up with a glut in high-end housing?
What happens to all those factory workers, security guards, and small business owners who cannot afford houses on the island? In the past, they would go for cheaper houses on the mainland, even as far as Kulim and Sungai Petani in Kedah. But with higher oil prices and shrinking real incomes, it doesn’t make economic sense to commute such long distances to work. To make matters worse, if workers were to drive to work via the proposed second Penang bridge, their expenditure on toll and petrol charges – for the bridge segment of the commute alone – could come up to RM500-800/month.
What will happen to Penang Island itself? Will it end up the playground of the rich and the well-heeled with its marinas, upscale shopping malls and a possibly gentrified inner city – with no place for the poor, the lower-middle class and even a large segment of the middle-class?
Clearly the market and the developers have failed to provide adequate affordable housing for all sorts of reasons. The main reason is that they will build housing that has the fattest profit margins, and these are the high-end condos and choice bungalows.
And where low-cost housing is provided, is it in the right location (easy access to public transport and near places of work) and at affordable prices? Are we sure that the really deserving and the poor are getting such housing? Or are those with connections jumping ahead in the waiting list?
It is time for the State to intervene by setting up a state-run Penang Housing Development Board. Singapore did it with their HDB. Why not Penang?
This excerpt is from a report in Star Biz:
THE escalating cost of building materials is raising concerns over the widening gap between the income levels and the selling price of properties as well as availability of affordable housing.
“A family with a combined monthly income of RM10,000 is eligible to obtain a mortgage loan of about RM350,000 from a commercial banking institution. But how many fall in this income bracket?,” asked registered and chartered valuer C.A. Lim & Co proprietor Lim Chien Aun.
“From statistics collected, the average employee monthly income is RM2,000 to RM4,000. On a joint basis, this enable the purchasers to obtain a mortgage loan for a property valued at about RM200,000.
“But with the rising cost of building materials and construction, a RM200,000 residential property will be about 30% higher if other factors affecting the market value remain as it is today.”
Steel bars have gone up to RM4,100 per tonne compared with RM3,500 in June while cement is sold at RM13.45 a bag compared with RM10.95.
Across the board, all types of commonly used construction materials have increased by 15% to 30%.
Less than 5% of the families in Malaysia have a combined income of RM10,000 and above
Lim said the Penang state government should seriously encourage the development of more affordable housing schemes on the island…