PR1MA homes out of reach of average Malaysian

PETALING JAYA: Perbadanan PR1MA Malaysia, which is in various stages of building 141,661 units of PR1MA homes, have only managed to sell 11,944 units – a telling sign that many in the country are unable to afford to buy a house.
The numbers suggest that PR1MA homes, that range between RM100,000 and RM400,000, seem to still be out of the reach of the average Malaysian.
A Bank Negara initiative, Housing Watch, estimates that 57.6% of households in Malaysia, which earn up to RM5,999, would only be able to afford a home worth RM354,111.
Perhaps a more telling number is that a household earning less than or equal to RM1,999 would only be able to afford a home costing between RM112,200 and RM124,700.
When contacted by SunBiz, PR1MA acknowledged that many registrants "drop out" during the financing stage, and those who face difficulties in securing loans from banks fail to proceed with the purchase, which is why the Special PR1MA End Financing (SPEF) scheme was introduced for buyers to gain access to a higher loan amount.
"SPEF can be considered a loan booster. However, if they have other financing issues that hinder them from getting a loan in the first place, SPEF is not the solution," it said, stressing that SPEF is not a scheme that allows buyers to purchase properties beyond their means.
Since its introduction in January, only 50 applications under the SPEF scheme has been approved. A total of 197 applications were made for RM44.1 million in loans.
"Difficulties in obtaining home loans are not PR1MA-specific, but an issue faced by other developers as well, especially those involved in public housing programmes. This is mainly because these types of homes are targeted towards those who may or may not have adequate financial 'muscle' to purchase a house," it added.
With PR1MA already obtaining approval for the construction of 259,881 units, it is envisaged that the affordability issue will lead to more overhang in the real estate market, that is already being seen now.
A National Property Information Centre report released last week revealed a residential overhang in the supply of PR1MA homes in the Kuala Muda and Baling districts in Kedah.
The corporation maintained that it undertakes proper demand analyses and market studies before embarking on any development, to ensure that its projects meet the registrants' needs.
"Our database show there is a big demand for PR1MA homes and in certain areas in the Klang Valley such as PR1MA @ Jalan Jubilee project, applications were 27 times more than the available units.
Therefore, it is not necessary to secure buyers first (before commencing of construction)," it said.
For PR1MA homes, construction begins once the corporation obtains the necessary approvals from PR1MA's Members of Corporation as well as relevant stakeholders and authorities. It takes 24 months and 36 months to complete landed and high-rise units respectively.
"To say that there is low demand for PR1MA homes is incorrect. There is high demand for our products. This can be seen from PR1MA's current registration number, which is now at 1.5 million registrants. The average subscription rate for the projects that we have launched is at least double against units offered."
Perbadanan PR1MA Malaysia has completed a total of 10,199 units nationwide and is optimistic of achieving its target of completing 17,000 units by year-end. It aims to sell 16,250 units by end of January 2018.
The corporation, which is still planning for 2018, expects to sell and build significantly more units next year compared with 2017.