By Professor Dr Ismail Omar
To date, the Covid-19 pandemic has infected more than 9,100,000 people and more than 470,000 deaths worldwide. In Malaysia alone, more than 8,000 people have been infected with more than 100 deaths. Statistics showed that more than 700,000 jobs were lost in the country.
Job loss means the demand for housing is stressed and weakened. In general, the property market has dropped by up to 15%. When the property market is slowing down, property incentives to potential house buyers and land developers have sought after.
Consequently, the government was reactive enough to establish the Economic Recovery Plan (PENJANA) on Jun 5, 2020, to improve the property industry nationwide. The total stimulus packages are worth RM35 billion ringgit (US$8.1 billion).
Potential house buyers are mingling around and doing the shopping of houses. The real result has yet to be seen.
Under PENJANA, the government has reactivated the Home Ownership Campaign (HOC), which was introduced in 2019. The scheme allows discount and measures to stimulate the property market during and post Covid-19. The incentives include stamp duty exemption, adjustable the percentage for margin financing limits of certain properties, exemption of Real Property Gains Tax (RPGT), free legal fees and related costs in property transactions.
Most of the incentives are short term measures provided by the government until Dec 31, 2021, only.
In modern times, we are living in an ever-changing society. Things are moving so fast. If you are not responsive enough, somebody else will. Similarly, the economic environment is also changing all the day along. We have no choice rather than to keep pace with the changes and be able to manage the transition. How best could we do that? At the back of our mind, buying a house is no more a house but a home instead.
To stay relevant, we have to play by rule – the rule of the game that governs, controls and keeps our self moving forward. According to Professor Douglas North, Nobel Prize Winner in Economic Science in 1996, some institutions are formal and informal rules of the games.
Formal rules (written rules) and informal (unwritten) are things such as tradition and habits. Once the patterns change from custom to another, it has to be written and to make it formal to guide the people.
With proper enabling guidance (and amendment from time to time once changes occur) the society will be guided rightly. However, the guidance may be two folds – the positive and negative sides.
Once the rule is seen to be positive, people will behave correctly. Otherwise, they will act negatively, and the effect is a constraint which requires mitigation.
With the rules of housing such as the Housing Development (Control and Licensing) Act 1966 (Act 118), it is already outdated and has to be amended to meet the demands of the people and resolve their housing woes. Issues related to affordable housing and unsold (or property overhang) housing units have to be resolved.
Also unresolved are issues pertaining to the supply of land, including Malay Reserved land and wakaf land, to build houses for the B40 groups. In brief, the average value of Malay Reserved, customary and wakaf land is lower than the market, which is surprising that the completed houses on those land are at par in the market.
Therefore, the future of housing development must consider a harmonised law to offer affordable houses to the people at large. In relations to the role of the government to facilitate a healthy property market by reviewing policy and amend laws, all Bumiputras policies and affordable housing must be revisited and harmonised accordingly.
The time has come for housing-related laws to be reviewed, amended and harmonised to keep pace with current requirements. On one hand, there is the ageing population who are looking for a retirement home and well-being community, close to the hospital and recreational amenity.
On the other hand, there is a young workforce who are enjoying mixed development living with style at high rise residential and shopping malls on the ground floor. For sure, land developers have to adjust their business strategies accordingly. They have to provide smaller units with wi-fi facilities and transit-oriented development (TOD) as what the young people are looking for.
Hence, the future direction of the housing industry must be striking a balance between safety, healthy and wealthy and the digitalisation of life.
We need a new direction of housing the nation as it is essential to consider the aspirations of all players – the house buyer, developer, bank and government agency tasked with overseeing the success of a housing project.
The house buyers are always eagerly and impatiently looking for houses to buy at whatever prices subject to financing availability.
The banks are releasing loans to buyers and developers, although the market study is not good since the report is not being made compulsory. The land developers are looking for the highest or maximum profits ever.
Professor Dr Ismail Omar PPERT is the president of the Land Professionals Association of Malaysia (PERTAMA) since 2014 and lecturer in real estate management at Universiti Tun Hussein Onn Malaysia.
This is the first of a 3 part series. To read parts 2 and 3, please click on the links below.