This morning, I asked a supplementary question in the Johor State Assembly to the EXCO for Housing and Local Government Dato’ Haji Mohd Jafni bin Md Shukor on the question of housing.
Housing is a major concern raised by many ADUNs. The Speaker bundled 5 questions on housing for the EXCO to answer, and he gave me an opportunity to ask a supplementary question.
We are faced with a contradiction.
On the one hand, as we are aware, there is a massive housing glut in Johor Bahru.
On the other hand, there are many who need housing, especially the B40 and even M40, in part because over the years, developers choose to build high end houses instead of affordable ones.
We are faced with two challenges which will plague us and the rest of the world:
First, the interest rate will go up, which means developers will have less interest to build even high end units, not to mention the cheaper ones.
Also, with Malaysians especially B40 and even M40 being highly inundated with household debts, it will be very difficult for banks to give loans. According to Bank Negara, 76% of households have savings that can only cover less than three months of living expenses.
Within the region, Malaysia has one of the highest household debt-to-gross domestic product ratios at 89%, compared with 9.9% in the Philippines, 17.2% in Indonesia, 69.7% in Singapore and 89.3% in Thailand. In the 2021 annual report, Bank Negara points out that 65% of borrowers already have either car or personal loans.
This may constrain the prospective borrowers’ capacity to take on a housing loan. The total household debt is contributed by hire purchase and personal loans, as well as credit card debt which stood at 28%.
The more housing loans the banks give to those who are already highly indebted, at some point it may lead to a banking crisis.
Second, the cost of construction has risen massively in the past year or so due to supply chain disruptions. The cost of building will be higher and further deters construction in the next year or so, if not longer.
The formation of Perbadanan Kemajuan Perumahan Negeri Johor (PKPJ) in early 2022 to coordinate and facilitate the housing sector is a welcome move.
My question is, given the background I outlined above, is the Johor Government prepared to think beyond the ownership model for the housing of the poor and the middle class.
The new agency PKPJ can be given a mandate not of ensuring everyone owns a house but every Johor family has decent homes, regardless of whether they own or rent it.
Renting is not fashionable in Malaysia, yet. But renting is a way out of the contradiction of our time.
I would propose that PKPJ also work on creating laws and rules to protect both the owners and tenants to facilitate renting.
Renting which would provide rental income for owners may also help prevent a spate of firesale in case the hike of interest rates become too high for the owners to continue paying installments.
We are in unprecedented time and we need new solutions to deal with the housing crisis, both the glut and the shortage for many families.
Liew Chin Tong
21 June 2022
At the Johor State Assembly,
Kota Iskandar
To all Malaysians who created the GE14 miracle, keep fighting. We will be back stronger.