Affordable Housing Dwellers Find It Difficult To Upgrade

More housing choices needed in Malaysian urban centres, together with upgrades to improve quality of life at existing affordable housing

Affordable Housing Dwellers Find It Difficult To Upgrade
Photo by Pavi Kunusilin / Unsplash

KUALA LUMPUR, 20 September 2022: A study by a property database technology company found that four of every five families that move into affordable housing – also called low and medium cost (LMC) housing – such as PPR and their variations, will practically end up living there for the rest of their lives.

This finding, presented recently by Joe Thor, PropertyGuru DataSense's general manager, was aimed at unearthing the desirability of LMCs within Klang Valley.

"We looked at residential property transactions identified as LMC housing schemes based in Klang Valley from 1980 onwards,” he says at the Rights To The City (R2C) Conference organised by Think City here recently.

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According to Thor, it was important for authorities and planners to understand why four out of five residents are unable or unwilling to leave their LMC housing once they are rooted there.

"Only 20% will leave their LMC house and enter into the private housing (built by developers).

The reason for leaving LMC housing is primarily because such families got bigger, so they moved mainly to landed terrace houses (and even then, to outer districts as they are cheaper),” he said as he presented the findings of the study that looked at the various motivations that drive the B40 as well as those who are about to move into the M40 income groups.

Joe Thor, PropertyGuru DataSense's general manager

Malaysia’s Housing Policies

LMC housing has been part of Malaysia’s housing policies since pre-Independence, with rapid urbanisation driving demand. Since the 1980s, a key feature of LMC housing policy is the option for those who are not so well to do to own have a fair shake at home ownership – with B40 communities allowed to purchase a home under various schemes, whether through loans or rent-to-own schemes. To prevent speculative activities or abuse, there is usually a five to 10-year moratorium on subsales after vacant possession is obtained.

LMC housing in the 1970s and 1980s went up primarily in locations around central Kuala Lumpur. These would have comprised terrace and cluster housing and 5-storey walk-up flats. As the city grew, the radius of built LMC housing naturally expanded.

For example, Perbadanan Kemajuan Negeri Selangor (PKNS) projects are located mainly in the Petaling district of Selangor, as well as Kuala Lumpur. Some of the earliest projects include PKNS Ulu Kelang in Kuala Lumpur, PKNS Serdang Jaya in Petaling, Selangor, as well as PKNS 17 Kampung Kerinchi, Kuala Lumpur. Of course, there are also the PPR (Projek Perumahan Rakyat) housing in the equation later on.

"By understanding what happens to these properties once they enter the open housing market, we can discover insights with possible implications to the wider housing market,” says Thor as he presented the various types of LMC housing favoured by their target groups.

It was estimated in 2013 that public housing residents numbered more than 1.7 million Malaysians in KL and Selangor, spread across more than 3,000 public housing projects. This issue thus affects a substantial number of Malaysians.

The PropertyGuru study of its database examined approximately 7,900 LMC projects within Kuala Lumpur and Selangor, analysing about 139,500 sales transactions from the 1970s, looking at residential property transactions identified as public housing schemes from the 1970s onwards with LMC housing prices ranging from RM25,000 to a maximum of RM350,000.

Although LMC housing comprises just 10% of the total number of housing projects in those locations, they made up 18% of total sales transactions which already indicates a demand for these types of homes.

It was believed that those unable to leave may be facing a lack of options or lack of access to financial resources. Those unwilling to leave may feel that way because their current home could be in a strategic location (close to public transportation, key employment centres, amenities such as schools, etc).

This lack of upward mobility in housing can have some implications for planners and authorities as they try to ensure affordable and decent housing in urban centres, where land is scarce and increasingly expensive, coupled with increasing construction prices.