Schemes Upon Schemes

iProperty.com Poll: Do you think "My First Home Scheme" is effective to help first home buyers

Editor’s Commentary:
Close to 76% (475 out of 623) respondents think that the “My First Home Scheme” is not effective as the location is a distance away from the city centre and after payment of the housing instalments, conservatively estimated at RM1,200 per month, there isn’t much left, if any at all, for other daily expenses.

Realizing the impracticality of this, the government recently decided to launch a supplementary housing scheme with a higher monthly income ceiling at RM6,000 per household. Called “middle class homes” with prices ranging between RM220K to RM300K in major cities, the initiative was supposed to address the problem of high house prices in Greater KL, Penang and Johor.

There is however one little snag – at built-ups of between 850 – 1,000 sq ft, which comes up to RM300 psf, these apartments at that price range can’t exactly be considered cheap. There are similar properties in the Klang Valley that are selling for cheaper. For example, a recently listed condo in Puchong, Vista Millennium Condominiums, displayed a selling price of RM288,000 at a built-up of 1,100 sq ft on iProperty.com.my.

The next question is how far would these apartments be located away from the city centre. Again, the government has a solution. It was announced recently that a portion of the Sungei Besi airbase in Kuala Lumpur (one of the last remaining huge acreage of undeveloped land in KL) will be allocated for 1Malaysia people’s housing project (PR1MA).
Scant details are available however. Is this a new scheme, or is it part of the Supplementary Housing Scheme with a RM6K income ceiling, or part of the original “My First Home Scheme” with RM3K income ceiling or both.

‘People First’ Homes

Just when you think there is no end to more schemes (on the flipside, it’s good to “fine tune” the scheme until it satisfies everyone), at print time, Datuk Seri Najib Tun Razak reportedly launched the 1Malaysia People’s Housing Programme (PR1MA) for first-time buyers to own homes of up to 1,400 sq ft.

Depending on the location, the houses would be priced at between RM150,000 and RM300,000 while the minimum size would be 800 sq ft. Income ceiling remains at RM6,000 per month but what’s fantastic is that buyers can get up to 105% financing from selected financial institutions on top of having the stamp duty exempted.

The additional 5% is given to pay for insurance and legal fees for the Sale and Purchase, according to reports.
A total of 42,000 houses would be built in 20 locations in the Klang Valley, Rawang and Seremban. Eight projects are expected to kick off this year. I assume one of the areas would be a portion of the Sungei Besi airbase in Kuala Lumpur as reported earlier prior to the launch of PR1MA.

The only similarity between this latest scheme, PR1MA and the Supplementary Housing Scheme is the RM6,000 monthly income ceiling. I assume that the latter has been subsumed under PR1MA which is the final product after fine-tuning the Supplementary Housing Scheme.

However much the fine-tuning goes on, the end result seems always to be a better product. But as always some “constructive criticisms” needed to be aired first before the well-meaning programmes satisfy everyone.
Already there are criticisms that the government is unfairly penalizing those who earn RM6,100 or more per month who will be excluded from the scheme. Another gripe is how will potential purchasers be selected given that there are very limited units available.

We shall hear more about this in the coming weeks – the impact on property prices and the quality of such “affordable” housing, among other issues.