PETALING JAYA (Feb 21): The government should look to enhance the 1Malaysia People’s Housing (PR1MA) scheme by improving its efficiency in processing home purchases, Affin Hwang Capital Research senior associate director for equity research Loong Chee Wei (pictured) told TheEdgeProperty.com when commenting on PR1MA’s recently-announced policy changes.
Loong lauded the government’s move to shorten the moratorium period for the resale of PR1MA homes from 10 years to five but efforts should also be made towards ensuring proper implementation so that the objective of helping the country’s middle income group own a home is fully met.
“My view is [that] the five-year moratorium period from the date the Certificate of Completion and Compliance is issued should be long enough to deter speculation on PR1MA homes while short enough to give homebuyers the flexibility to upgrade their homes.
“When we include the construction period of two to four years for a PR1MA home, this will extend the holding period to seven to nine years effectively,” he said, citing the example of Singapore’s HDB which also imposes a minimum occupation period of five years for their homes before the buyer can sell them.
However, Loong noted that the authorities must also ensure that only Malaysians can purchase PR1MA housing on the secondary market.
On the increased eligibility of monthly household income from RM10,000 to RM15,000, Loong viewed it as a positive move, considering the price of a PR1MA home can go up to RM400,000.
“It is easier for middle income groups to buy better located or larger units in urban areas, but priority should be given to lower income groups for lower-priced PR1MA units to meet the objective of providing affordable housing to this target group. For now, I believe the RM15,000 household income criteria is fair,” he said, citing the survey done by Sime Darby Property in 2014 that each household needs a monthly income of RM14,580 to afford a home in the Klang Valley.
On the step-up end-financing scheme for PR1MA homebuyers, Loong said the offer will improve PR1MA homebuyers’ eligibility for a housing loan although there is a risk that it will affect their retirement savings if they decide to withdraw funds from their Employees Provident Fund (EPF) Account 2.
“In theory, using the EPF savings to purchase a property is a relatively safe investment given the relative price stability of Malaysian properties based on good capital preservation if not appreciation in the past,” he said.
An alternative to the step-up financing is the rent-and-own scheme where homebuyers will rent the house while the rental payment will go towards paying for the house. “The homebuyer will eventually own the house when full payment is made,” he said.