Melaka have the ‘cheapest’ houses in Malaysia; is it true, and what drives the housing prices in the state?
As Malaysia grapples with housing affordability, Melaka stands out with the lowest average house prices, but challenges loom
Yahoo MalaysiaWed, 24 April 2024 at 12:27 am GMT-7·5-min read
Recent reports highlight Melaka's affordability amidst housing debates, with average home costs at half the national average of RM458,751. (PHOTO: Getty Images)
By VINCENT TAN
Even as Malaysians debate about the cost of owning a home in Malaysia and whether residential properties have become more or less affordable, Melaka appears to be maintaining its status as the state with the lowest average house prices.
According to recent news reports, the average cost of owning a home in the historic state is half the national average of RM458,751.
But is that true, and is RM207,600, as reported, enough to purchase a house in Melaka?
Starting prices are considerably low
To Melaka-based real estate consultant and property agent Hairil Wahiri, there is no doubt that the reported statistics are accurate. And he claims that part of the reason for the state's "cheap" prices is the lower starting prices of new properties."Among the things (that can contribute to) high house prices are developers who price new houses exorbitantly and a lack of control by the state government.
"When (those things happen), secondary or sub-sale prices also (increase). Before long, house prices become less and less affordable (across the board)," Hairil said.
In the case of Melaka, however, the state has a robust affordable housing policy ("Rumah Mampu Milik"), which now requires developers to assign 50 per cent of all new projects larger than 4.05 hectares (10 acres) for low- and medium-low-cost houses, priced from RM120,000 to RM250,000.
It is also focused on increasing the affordable housing options for Melakans, with the Melaka Housing Board recently announcing a target of 41,900 affordable homes to be built by 2030.
Real estate agent Norhisyam Ariffin, nevertheless, points out that the low prices of houses in the state could also be due to Melaka's distance from Malaysia's economic epicentre of Klang Valley and the lower income levels of Melakans.
"Melaka has lower average wage or income levels (for graduates), at around RM4,086. So that (and how far Melaka is from the Klang Valley) combine to contribute to lower housing prices," he said.
He added that the property market has changed a lot in the wake of the COVID-19 pandemic, and stakeholders have had to adapt accordingly.
"Property developers, for example, need to build more affordable homes now and follow the capacity of the community they're building in," Norhisyam said.
Housing policies in Melaka is much different
Incidentally, Melaka's affordable housing policy appears to be more straightforward than similar policies elsewhere in Malaysia.For instance, Selangor's Rumah Selangorku 3.0 plan subdivides the state into zones, ranging from high-density (Zone 1) to rural (Zone 4), and takes into account the placement of light-rail transit (LRT) and Mass Rapid Transit (MRT) infrastructure.
Also, rather than a flat percentage of affordable homes required in new developments, the policy uses a progressive percentage system that considers the size of projects.
Kelantan, conversely, does use a flat percentage system. However, the allocation for affordable homes is 20 per cent for strata developments measuring three acres or exceeding 250 units and 15 per cent for landed projects measuring five acres and above.
Additionally, the state divides affordable housing into three levels, with prices of property ranging from RM45,000 to RM180,000 in relation to corresponding floorspace of 750 sq ft to 1,200 sq ft.
Replicating Melaka's success
For the record, the Real Estate and Housing Developers' Association (Rehda), the country's main housing developer body, previously stated its commitment to assisting the Malaysian government in providing sufficient affordable housing for all citizens.Nevertheless, it also highlighted several challenges.
For instance, in order to subsidise the cost of affordable properties, which are frequently sold below construction costs, it said that developers have had to increase the price of regularly priced or open-market houses. This has led not only to the latter properties becoming unaffordable but also resulted in some projects becoming "sick" and abandoned.
Rehda's suggestion, thus, has been for Putrajaya to be totally responsible for the delivery of affordable housing.
The question in light of Melaka's seemingly successful housing policy, however, is whether it would be possible to replicate the state's achievements in other parts of the country, including traditionally "hot" markets such as the Klang Valley and Penang or even in East Malaysia, where the land area is greater.
Industry players appear uncertain.
Klang Valley-based real estate agent Sean Thong, for one, said that while there are affordable housing policies across the country, terms differ from area to area and project to project.
For instance, in the federal territories of Putrajaya and Kuala Lumpur as well as Selangor, policies will need to consider the density of population and existing development.
"You also have land prices, which are much, much higher in central Selangor and, of course, Kuala Lumpur," Thong added.
Hairil, however, is more optimistic but cautions that duplicating Melaka's success would necessitate changes to state policies.
"(The policy) can be replicated in other states, but this requires state governments to play their role in setting price limits and quotas for affordable housing, and not just leaving it to developers.
"In addition, there needs to be a centralised system for affordable housing, as (the respective state policies) aren't integrated. This way, you can ensure there is no mismatch of supply and demand," he said.
Real estate agent Sean Thong, based in the Klang Valley, highlights the varying landscape of affordable housing policies across Malaysia, pointing out differences in terms from area to area or project to project. (PHOTO: Getty Images)
