rics cobra 2018 value systems, location, price, distance and size. criteria that fall within...

rics.org/cobraconference

RICS COBRA 201823 – 24 April 2018RICS HQ, London, UK

In association with

RICS COBRA 2018The Construction, Building and Real Estate Research Conference of the Royal Institution of Chartered Surveyors

Held in London, UK in association with University College London

23 – 24 April 2018RICS HQ, London, UK

© RICS, 2018ISBN: 978-1-78321-266-8ISSN: 2398-8614

Royal Institution of Chartered Surveyors Parliament SquareLondonSW1P 3ADUnited Kingdom


The papers in this proceeding are intended for knowledge sharing, stimulate debate, and research findings only. This publication does not necessarily represent the views of RICS or University College London.

115 An investigation into the overhang of affordable housing in Malaysia


COBRA 2018 AN INVESTIGATION INTO THE OVERHANG OF AFFORDABLE HOUSING IN MALAYSIA AbdulLateef Olanrewaju1, Seong Yeow Tan, Sheng Wei Lim and Abdul-Rashid Abdul-Aziz2

1, 2, 3 Department of Construction Management, Faculty of Engineering and Green Technology, Universiti Tunku Abdul Rahman, Malaysia. 4School of Housing, Building and Planning, Universiti Sains Malaysia. Pulau Pinang, Malaysia ABSTRACT

Housing provides safety, comfort, positive experiences, satisfaction, and convenience to home occupants. Furthermore, it is also a source of wealth for many households. Despite the fact that housing is not affordable in Malaysia, unsold properties and overhangs are high and on an increasing trend. Therefore, the present research seeks to provide answers to a basic policy question namely, why affordable housing overhang is high, given the low homeownership rate in Malaysia. To provide answers to this question, a cross- sectional survey was conducted involving 30 factors and 150 participants, which included developers, contractors and design teams. Kaiser's Measure of Sampling Adequacy indicated that the strength of the relationships among the causes was strong (MSA =0.772). Bartlett’s test of sphericity was significant χ2 (351) = 2070.057, p<0.001), which indicated the data was drawn from the same population and that the causes were related. The results from the data analysis revealed that five major causes of overhang were: restrictions in applying for bank loans (4.16), a lack of household confidence on future housing values (4.07), a rise in living costs (4.05), unsuitable housing neighbourhoods (4.00) and an increase in housing prices (3.97). The present research provides fresh insight into the difficulties that affordable house buyer’s face and the factors that impact their levels of satisfaction. The findings will be useful to policy makers, urban planners and developers. Keywords: supply sides, homebuyers, government policy, affordable housing, financial affordability.

INTRODUCTION Housing or residential buildings include the construction of private homes, flats, terraces, condominiums and apartment buildings. The adequacy or lack of housing provisions is a measure of national growth and development. If the quality of housing is adequate and accessible to all, the government and its people will spend less on health care and recreational facilities. Moreover crime and pollution will be prevented and productivity and prosperity will increase (Olanrewaju and Woon, 2017). Houses represent the single most expensive investment that people who buy/build houses make. Additionally, for those that rent, the rental is often their single highest monthly

1 [email protected] 2 [email protected] 4 [email protected]


or annual expenditure. There are different classifications of housing. For instance, there is high-income housing, medium-income housing and low-income housing. There is also low-rise housing, high-rise housing and skyscrapers. From a financial perspective, low and medium income housing are normally considered to be affordable housing. Defining affordable housing in terms of financial affordability is misleading. For ontological reasons, “affordable housing’ should take into account homebuyers/homeowners value systems, location, price, distance and size. Criteria that fall within homebuyers’ value systems include comfort, satisfaction levels, quality, preferences, and tastes. If homebuyers have to sacrifice their value systems to occupy a house for financial reasons, then a house is not affordable. In Malaysia, housing affordability is measured in terms of financial ability. However, housing in Malaysia is not affordable (Olanrewaju et al., 2016, Bank Negara, 2017, Demographia, 2017). Indeed, the affordable housing gap will be even wider if a more realistic approach is used compared to the affordable housing gap estimate based on financial affordability of houses. While there are shortages in affordable homes, the rate of unsold, overhang and abandoned affordable housing is high and on the increase. An overhang unit is defined as a property that is completed and issued with a Certificate of Fitness for Occupation (CFO) or a Temporary Certificate of Fitness for Occupation (TCFO), but remains unsold despite having been put on the market for at least nine months (NAPIC, 2004). The volume of residential transactions over the last four years shows a significant reduction in real terms. For instance, volume of residential transactions was 272,669; 246,225; 247,251 and 235,967, between 2012 and 2015 (NAPIC, 2016). Moreover, house vacancy rates increased from 6% in 2010, to more than 10% in 2015. In addition to this, 9, 733 completed houses remained unsold in 2014, and in 2015, the number of unsold houses reached 11,316 (NAPIC, 2016). MIER’s Residential Property Survey Report conducted in 4Q 2015 found that 70% of developers reported poor sales (REHDA, 2016). Over the last 12 years, the size of residential property overhang averaged at around 24% of the units launched. Therefore, the present research aims to investigate the causes of affordable housing overhang in an effort to provide suggestions on methods to curb overhangs and abandoned houses. More than 50% of the overhang properties are priced at RM300,000 and below. However, if a more realistic definition is adopted, where the value systems of homebuyers are considered, such properties could be priced at RM500,000 in most cities in Malaysia and even more in major cities. Although the causes of property overhang can be examined from multiple perspectives, the current study focused on the supply side, which included contractors, developers, government agencies and design teams. Issues pertaining to property overhang are of strategic importance to developers and contractors because it affects their revenues, profits, corporate objectives and their existence in the markets. Companies that cannot make profit will eventually go bankrupt and wind down. The theory of economics reveals that the primary essence of companies is to make profits other purposes only serve to facilitate profit maximisation and cost minimisation (Parkin, 2016) CONCEPTUAL JUSTIFICATIONS Housing is required to provide safety, comfort, experience, satisfaction, and convenience to home occupants. However, Malaysia is facing housing shortage problems with a population of 32 million people, (Department of Statistics Malaysia, 2017) a 7.2 million housing stock, (Department of Statistics Malaysia, 2014) and a homeownership rate of 50%. In order to increase housing stock and homeownership


rates, the government has introduced many measures which include schemes, programmes and policies. These measures include MyHome, Perumahan Rakyat 1Malaysia (PR1MA), Rumah Mesra Rakyat (RMR1M), Program Rumah Mampu Milik (RMM), Program Penyelenggaraan 1Malaysia (TP1M), MyDeposit Scheme, the Housing Loan Scheme, People's Housing Programme, the Rumah Transit/ transit house programme and My Beautiful New Home. Similarly, subsidies and tax reliefs have been provided to homebuyers, developers and contractors. The government has relaxed its restrictions on EPF, as contributors can now use part of their savings from EPF as a down payment for their housing loans. Developers also offer discounts and split payments to home buyers (Knight Frank, 2015). Developers (i.e. REHDA) plan to offer ‘bridging loans’ to home buyers in response to banks slashing housing loan approvals to 70% of house prices. The bureaucracies associated with land allocations are easing. GST is exempt for some construction materials and restrictions on the employment of foreign labour has been lifted or suspended. Despite these efforts, housing turnover, neighbourhood instability, unsold and overhang properties are high and on the increase (Olanrewaju and Woon, 2017). The size of unsold properties stood at 41% in 2015 (NAPIC, 2015a). See Table 1 for the distribution of residential property overhangs for the last 12 years. In order to determine the number of overhang affordable housing, the Malaysia Housing Price Index produced by NAPIC was used. Table 2 contains price indices for the last eight years. If affordable housing is defined as median priced housing, which is RM379, 843 (Table 2), more than 90% of overhang residential properties fall into the affordable housing classification (Table 3). However, even if affordable housing is priced at RM300, 000, about 60% of overhang residential units are considered to be affordable housing.

Table 1: Property Overhang, 2004-2015 Year Unit launched Unit overhang Percentage of overhang 2004 82,343 15,558 18.89 2005 95,714 19,577 20.45 2006 114,938 25,645 22.31 2007 118,317 23,866 20.17 2008 - 26,029 - 2009 115,904 22,592 19.49 2010 101,054 23,481 23.24 2011 82,404 19,607 23.79 2012 - 53,775 - 2013 53,775 13,547 25.19 2014 53,655 11,816 22.02 2015 51,042 11,316 22.17

Source NAPIC, 2004-2015 Table 2.The Malaysian Average House Price by House Type, 2009-2016

Year All house Terraced High rise Detached Semi detached

2009 204,470 176,413 161,863 364,424 354,540 2010 215,678 185,505 172,651 382,512 374,697 2011 239,295 207,702 192,852 402,124 417,563 2012 271,384 234,934 223,735 454,186 465,612


2013 301,964 256,910 254,115 516,750 522,062 2014 330,428 284,136 277,729 565,869 554,402 2015 354,741 303,826 299,182 601,785 591,575

2016 379,843 326,445 326,204 642,775 619,767

NAPIC, 2017 Thus, the policy question is, what the causes of affordable housing overhang are or why are people not buying low and median income housing, despite low homeownership rates and various government measures to stimulate the housing market. Collectively, academic literature suggests that overhang, and unsold properties can be traced to various causes including low income levels, high property prices, unsuitable locations, loan rejections, high interest rates, undesirable neighbourhoods, and a lack of social capital, recreational facilities, and transportation (Olanrewaju et al, 2016, Burton, 2000, Chan et al., 2008 Bentzien et al., 2012 and Mohit et al., 2010). A plethora of research has been conducted on the topic of housing, nevertheless, empirical research that focuses on the causes of affordable housing overhang are nascent. A critical examination of the factors causing affordable housing overhang is inevitable. It is required to increase homeownership levels, to reduce the number of overhang properties and increase homebuyers’ satisfaction levels.

Table 3. Malaysia residential property overhang by prices, 2010 t0 2015 Price 2010 2011 2013 2014 2015 50 and below 2,745 2,302 1,591 1,651 393 50,001 - 100,000 7,317 5,978 3,488 1,833 1,354 100,001 - 150,000 4,051 2,648 1,426 1,243 655 150,001 - 200,000 2,893 2,461 1,638 1,066 901 200,001 - 250,000 1,622 1,573 878 1,230 1,043 250,001 - 300,000

3,721 3,114 879 1,143 1287

300,001- 400,000 943 782 1,246 400,001 - 500,000 641 927 860 500,001- 1,000,000 624 601 629 1,224 2,190 1,000,000 and Above 160 930 1,434 717 1,387

Source NAPIC, 2010-2015 OUTLINE OF RESEARCH DESIGN

Primary data was collected based on convenience sampling. Convenience sampling is data collection where a survey is administered to those that are available, accessible and willing to be respondents. Convenience sampling is an appropriate method where information on population size is not available. It is important to note that its findings may not be generalizable. Nevertheless, with a large number of respondents, the findings can be representative (Sekaran and Bougie, 2010). The survey was conducted in two phases, through hand delivery and an online survey. The first phase was administered to respondents that attended the ARCHIDEX (International Architecture, Interior Design & Building Exhibition 2017) in the Kuala Lumpur Convention Centre, based on convenience sampling. ARCHIDEX is held annually and attended by architects and other stakeholders in the construction sector (i.e. engineers, quantity


surveyors) in Malaysia and other South East Asian countries. The ARCHIDEX 2017 was held between the 19th of July 2017 to the 22nd of July 2017. The survey was conducted on the 22nd (Saturday) of July 2017. A total of 80 completed survey forms were returned. The second phase was conducted through an online Google survey form. Respondents of the online survey form were asked to help forward the forms to their colleagues who they believed were competent to provide valid responses. On the cut-off date, which was two weeks after the online survey was first launched,70 valid forms were returned. The survey form included factors which led to the overhang of residential properties. These factors were obtained from Olanrewaju and Woon (2017), and Abdul-Rahman et al. (2013). Details on the authors’ experiences were included in the survey form. The questionnaire went through 2 pilot surveys that comprised of clients, developers and developer organisations. Respondents were asked to tick the degree of their agreement or disagreement with each cause of property overhang on a five-continuum scale; where 1 denoted strongly disagree, 5 denoted strongly agree,3 denoted slightly agree and 2 and 4 were located in between. The constructs were positively worded. A high score indicated a higher agreement with a cause and a low score indicated a lower agreement with a cause. The degree of each of the causes leading to overhang was calculated by a weighted mean score. To clarify, a mean score/overhang index of 1.00-1.79 denoted strongly disagreed; 1.80-2.59 denoted disagreed; 2.60-3.39 denoted slightly disagreed, 3.40-4.19 denoted agreed and 4.20-5.00 denoted strongly agreed. To ensure the results weren’t influenced by the researchers, missing data was not replaced with a mean or mode of a valid response. The SAS Enterprise Guide 7.1 was used to analyse the data.

ANALYSING THE RESULTS OF THE SURVEY

Analysis of respondents’ profiles The exact number of surveys administered cannot be ascertained, because online surveys were involved. However, 142 completed responses were received during the survey period. The results are presented in tables and figures and discussed in the following sections. Most (38.7%) of the respondents were from developer companies, followed by 27.3% that worked with contractors. The percentage of respondents that worked in architecture consulting firms was 16.7%, while those that worked with engineering firms comprised of 16%. Only 4% worked with quantity surveying firms. In terms of number of employees in the respondents’ organisations, around 70% had between 10 to 30 full-time employees and only 9% had more than 30 employees. It was found that a total of 57.3% respondents completed between 6 to 10 projects in the last ten years. Moreover, 40% completed more than 10 projects within the same period. Some of the respondents were associated with REHDA (16.7%), The National House Buyers Association of Malaysia (13.3%), The Malaysia Developer’s Council (8.7%), The Board of Surveyor Malaysia (6%), The Board of Architects Malaysia (18.7%), The Board of Engineers Malaysia (14%), The Chartered of Institute of Building (1.3%) and only 0.7% came from CIDB Malaysia. The respondents’ academic qualifications and industrial experience are contained in Table 4 and their positions are displayed in Figure 1. The respondent profiles indicate that they have a high level of proficiency to provide practical and dependable responses to the survey questions.


Table 4 between Participant's qualification and working experience in construction industry

Qualification Years of working in construction industry Total

2 to 5 years 6 to 10 years 10 years and above

SPM 0 0 13 13 Diploma 0 1 12 13

Bachelor Degree 3 13 17 33

Master Degree 4 15 20 39

PhD 0 14 38 52

Figure 1 Participant's position in an organization (Frequency)

Analysing the causes of residential properties overhang In order to test the measures of goodness of the causes of property overhang, Cronbach’s alpha reliability and validity tests were performed. The reliability and validity tests indicated that the causes were suitable for the aims of this research (Table 6). To further confirm the strength of the data, Bartlest’s test was conducted. The results signified a lack of multicollinearity problems among the causes, and that the respondents were drawn from those with similar experiences (χ2 (378) = 1153.611, p<0.001). The KMO was 0.779. Table 5 One-Sample Test

cause

Test Value = 3.5 Std. Error Mean t

Sig. (2-tailed)

Mean Difference

95% Confidence Interval of the Difference Lower Upper

Lack of incentive for homebuyers -3.177 0.0018 -0.2267 -0.368 -0.085 0.071 Low household income 7.442 0.0000 0.3333 0.245 0.421 0.044 Increase in house prices 9.096 0.0000 0.4667 0.365 0.568 0.051 Developers prefer to build more high-end properties rather than affordable housing

-2.186 0.0304 -0.1533 -0.292 -0.014 0.070

Poor location of residential units 9.227 0.0000 0.3533 0.278 0.429 0.038 High interest rates on mortgage loans 1.708 0.0897 0.0906 -0.014 0.195 0.053 Peoples prefer renting a housing unit instead purchasing a house -4.757 0.0000 -0.3400 -0.481 -0.198 0.071

Inefficient of government policies in land control system 9.515 0.0000 0.4000 0.317 0.483 0.042

05

101520253035

Directo

r

Site's S

taff

Site M

anager

Project

Mana

ger

Constr

uction

…

On Site

…

Engine

er

Archite

ct

Others


Difficulties in applying for house loans 5.214 0.0000 0.3000 0.186 0.413 0.057 Low quality of housing units 0.344 0.7311 0.0200 -0.094 0.134 0.058 Implementation of GST on housing costs 6.853 0.0000 0.4067 0.289 0.523 0.059

Stamp duty on the purchase of properties -2.556 0.0116 -0.1933 -0.3 -0.043 0.075

Rise in labour costs 0.191 0.8492 0.0133 -0.125 0.151 0.070 Household confidence on future housing value 8.304 0.0000 0.5800 0.442 0.718 0.069

High interest on loans to developers/contractors 0.933 0.3525 0.0533 -0.059 0.166 0.057

Lack of opportunities for employment in the neighbourhoods 6.756 0.0000 0.3200 0.226 0.413 0.047

Oversupply of housing properties 3.456 0.0007 0.2383 0.102 0.374 0.068 The cultural issues among home buyers 0.177 0.8597 0.0101 -0.102 0.122 0.056 Taxation for new housing development 3.737 0.0003 0.2114 0.099 0.323 0.056 Subsidy for new housing developments -3.293 0.0012 -0.2718 -0.434 -0.108 0.082 Housing architecture design 4.389 0.0000 0.2852 0.156 0.413 0.065 Rise in living costs 16.260 0.0000 0.5537 0.486 0.621 0.034 Developer’s reputation 1.401 0.1634 0.1040 -0.042 0.250 0.074 Housing neighbourhoods 12.375 0.0000 0.5000 0.420 0.579 0.040 Types of building method 4.204 0.0000 0.2584 0.136 0.379 0.061 Restriction in applying bank loan 12.258 0.0000 0.6611 0.554 0.767 0.053 Environmental pollution -4.976 0.0000 -0.3121 -0.436 -0.188 0.062 Furthermore, a one-way t-test was conducted to ascertain whether or not each of the cause is indeed a cause of overhang or not. For this reason, the null hypothesis was that the mean of the sample was not different from the comparison mean (H0: U=U0). Furthermore, the research hypothesis was that the sample mean for each of the factors was more than the comparison standard mean (Hr: U>U0). To interpret, the causes should be included in the survey. U0 was the population mean. The comparison standard mean or critical level off point was set at 3.5. Table 5 contains the results of the t-test where it can be found that (i.e. Pr>|t|) of each of the causes (Hr: U>U0) was significant except for four of the causes. The small standard errors, being nearer to zero suggested that the measurements of the respondents with respect to the criteria were representative. The interpretations of these statistics are that the causes and their measurements are appropriate to achieve the research’s aims. The overhang index or weightage mean is contained in Table 6. The results revealed that only 7% of the respondents disagreed or strongly disagreed that the causes were accountable for the overhang of affordable housing. However, around 30% agreed that the causes were slightly accountable, while some 65% agreed that the overhang of affordable housing was mainly due to the causes in the survey. In general, the respondents did not disagree with any of the factors as causes of property overhang. More specifically, restrictions in loan applications were cited as a major factor for affordable housing unit overhang. On the other hand, buyers’ lack of preference to rent instead of purchasing houses was the least likely cause of affordable housing unit overhang, according to the respondent developers, contractors and design teams.


MAIN DISCUSSION

Due to space constraints, only five of the causes will be briefly discussed. It is interesting to discover that loan restrictions were rated as a major cause of affordable housing overhang. In fact, 93% of the respondents agreed or strongly agreed with this assessment. This result was expected because, according to REHDA, affordable housing is not selling because of high rejection rates of housing loans by Bank Negara. As a result, REHDA is providing bridging loans of up to 50% of housing prices. However, the government (i.e. Bank Negara) opined that the high rate of loan rejections involves borrowers with high levels of pre-existing debt obligations, which would expose the borrowers to higher risks if they accumulated more loans (BNM, 2017). Indeed, increasing access to loans is not a policy answer to increase homeownership levels or reduce the overhang of affordable housing because in the long run, the prices of houses will also increase. Alternative funding methods should be developed and costs of housing should be reduced through collaborative measures. The second cause as to why affordable housing is not selling is because Malaysian homebuyers have low confidence in the future value of houses. This finding was not expected, it appears to be speculative in nature. The researchers of this study were skeptical to interpret this outcome because people buy affordable houses in order to live in, not to sell. Therefore, the second cause was difficult to interpret, especially for affordable housing. However, this could be interpreted to mean that affordable homebuyers also consider their homes as investments or sources of wealth, in the event that they intend to sell their houses in the future. The increase in living costs was found to be an important cause of affordable housing overhang. This finding was not very surprising. The price of food, education, housing and medical expenses are inflating. The Consumer Price Index is increasing year-on-year. For instance, it has increased by more than 30% since the year 2010 (Department of Statistic, 2017). The present study survey found that housing neighbourhoods was a major cause and a reason why potential homebuyers might not buy a house, hence leading to property overhang. Without a doubt, neighbourhood satisfaction is a basic driver of housing quality. Research on housing instability is increasing. Factors such as culture, crime rates and external facilities such as parking and playgrounds are some of the issues considered by research papers conducted. In addition to this, homebuyers prefer to buy houses near people they share similar cultures and languages with. Academic literature has led to the conclusion that the major reasons behind a poor housing market performance is because the properties launched do not meet the requirements of home buyers/occupiers. In support of this assumption, Woo et al., (2016) found that in the USA, home occupier dissatisfaction led to high levels of instability in neighbourhoods. Studies elsewhere (Burton, 2000, Tan and Khong, 2012; Whitehead and Monk, 2011 and Chan et al., 2008) have led to similar conclusions. Empirical research has shown a level of dissatisfaction of homebuyers with parking areas, facilities for the handicapped, community halls, and the level of safety in Malaysia (Abdul-Ghani, 2008). There is a close relationship between homebuyers’ satisfaction with their quality of life and the environment that they live in. Neighbourhood instability is a consequence of bad neighbourhoods. The increase in housing prices was also found to be a major reason for property overhang. This finding was not unexpected because previous research has shown that inadequate housing prices limit the affordability of housing in most parts of world (Demographia, 2017). Previous research conducted has also indicated that homebuyers in Malaysia are facing a cost overburden (Olanrewaju et al, 2016 Khazanah, 2015 and Demographia, 2017).


Table 6 Descriptive Statistics

Cause Reliability Validity Std. Deviation Index Ranking

Restriction in applying for bank loan 0.794 0.829 0.660 4.162 1 Household confidence in future housing values 0.824 0.586 0.858 4.074 2 Rise in living costs 0.788 0.707 0.410 4.047 3

Housing neighbourhoods 0.782 0.618 0.495 4.000 4

Increase in house prices 0.786 0.629 0.628 3.973 5

Implementation of GST on housing costs 0.787 0.625 0.650 3.926 6 Inefficient government policies in land control systems 0.787 0.686 0.510 3.892 7

Poor location of housing 0.792 0.720 0.446 3.865 8

Low household income 0.799 0.769 0.531 3.845 9 Lack of opportunities for employment in the neighbourhoods 0.783 0.645 0.584 3.818 10

Difficulties in applying for house loans 0.780 0.657 0.706 3.804 11

Housing architecture design 0.783 0.552 0.790 3.777 12

Oversupply of housing properties 0.781 0.677 0.786 3.764 13

Types of building method 0.788 0.753 0.746 3.750 14

Taxation on new housing developments 0.777 0.663 0.685 3.703 15

Developer’s reputation 0.774 0.483 0.909 3.601 16

High interest rates on mortgage loans 0.776 0.552 0.649 3.588 17 High interest on loans loan to developers/contractors 0.778 0.582 0.703 3.547 18

The cultural issues among home buyers 0.803 0.755 0.685 3.520 19

Low quality of housing units 0.781 0.645 0.705 3.507 20 Rise in labour costs 0.775 0.487 0.861 3.507 21 Developers prefer to build more high-end properties rather than affordable housing 0.784 0.546 0.854 3.338 22

Stamp duty on the purchase of properties 0.763 0.723 0.929 3.297 23 Lack of incentive for homebuyers 0.794 0.703 0.862 3.270 24

Subsidy for new housing developments 0.768 0.686 1.009 3.223 25

Environmental pollution 0.812 0.696 0.753 3.176 26 Peoples prefer renting a housing unit instead of purchasing a house 0.777 0.554 0.868 3.149 27

The average house price in Malaysia exceeds RM400, 000. In addition to this, developers consider a house priced at RM500, 000 to be affordable. In order to reduce the overhang of properties, a correlation was computed between the five major causes of property overhang. The existence of the correlation offered measures to reduce property overhang. The results of Spearman’s correlations were not strong but were significant (0.05), and presented interesting results. For instance, it showed that as the prices of houses increase, banks will continue to introduce restrictions on loan approvals (0.116). In addition to this, the increase in the general cost of living will be accompanied by an increase in the price of houses (0.163). However, as housing prices increase, homebuyers’ confidence in the future values of houses will reduce (-0.112). This finding is real in the long run, because of property busts. Similarly, it was also found that restrictions on loans will increase costs of living. The results also suggest


that as restrictions on loans increase, homebuyers’ confidence in the value of housing in the future will decline. CONCLUSIONS AND RECOMMENDATIONS

The present research has been able to offer answers to the research question on the causes of affordable housing overhang or why affordable housing is not selling. The outcomes of the results indicate that the main causes are related to prices of houses that are beyond the reach of those in medium income households. The practical implication of the findings is that efforts should be made to lower the price of houses. While this could be interpreted to mean that housing affordability is mainly defined financially, it is not surprising that developers still consider that offering loans to homebuyers will have a tangible impact on homeowners or will increase the housing market’s performance. The present study argued that the government needs to continue playing an active role by formulating policies that have an impact on housing price reductions. Policy makers and developers also need to play an active role in the reduction of housing prices. Urban planners should also integrate affordable housing alongside high-end houses within city centres. The research provides some insight into the thoughts of developers on critical issues pertaining to affordable housing delivery. However, further research efforts are required to investigate the causes of property overhang from the homebuyers’ perspectives. ACKNOWLEDGEMENTS The research presented in this paper was supported in full by a grant from the “FRGS"; project: Analytical Investigation of Problems in Housing Supply in Malaysia; Project number: FRGS/1/2015/TK06/UTAR/02/2. REFERENCE Abdul-Rahman, H. Kwan, C.L. and Woods, C. P. (1999), Quality function deployment

in construction design: application in low-cost housing design", International Journal of Quality & Reliability Management, Vol. 16 Iss. 6 pp. 591 – 605.

Abdul Ghani, S (2008) Neighbourhood Factors in Private Low-cost Housing in Malaysia. Habitat International, 32, pp. 485-493.

Bentzien, C., Rottke, C. and Zietz, J. (2012), Affordability and Germany's low homeownership rate, International Journal of Housing Markets and Analysis, Vol. 5 Iss. 3 pp. 289 – 312.

BNM (Bank Negara Malaysia, 2017) Bank Negara: Loan criteria won’t resolve affordable housing issue. STARBIZ (Wednesday 19 July 2017, p5 News).

BNM (Bank Negara Malaysia 2016). ‘Demystifying the Affordable Housing Issue in Malaysia’. Box Article in Annual Report. Kuala Lumpur.

Burton E, (2000), The compact city: just or just compact? A preliminary analysis, Urban Studies, 37, pp1969- 2006

Chan, H. E., So, M., Tang, S. and Wong, W. (2008). Private space, shared space and private housing prices in Hong Kong: An exploratory study. Habitat International, 32, pp336-348.


Department of Statistics (2017) Press Release: Current Population Estimates, Malaysia, 2016-2017. Available at https://www.dosm.gov.my [Accessed on 31 August 2017]

Department of Statistics (2014) Report on Characteristics of Household 2010: Population and housing census of Malaysia. https://www.statistics.gov.my

Demographia 13th Annual Demographia International Housing Affordability Survey: 2017 Rating Middle-Income Housing Affordability. Available at: www.demographia.com/dhi.pdf. [Accessed on 21 August 2017].

Khazanah Research Institute (KRI, 2015) The State of Household. Kuala Lumpur: Khazanah Research Institute. ISBN 978-967-12929.

Knight Frank 2015 Malaysian Real Estate Highlights 2nd Half 2015. Kuala Lumpur.: Knight Frank Malaysia Sdn. Bhd.

Mohit, A. M., Ibrahim, M., Rashid, R. Y (2010) Assessment of residential satisfaction in newly designed public low-cost housing in Kuala Lumpur, Malaysia. Habitat International 34 (2010) 18–27.

National Property Information Centre (NAPIC, 2014 - 2015) Property Overhang. http://napic.jpph.gov.my/portal [Accessed on 29 August 2016]

Olanrewaju, A. and Woon, C. T (2017) An exploration of determinants of affordable housing choice. International Journal of Housing Markets and Analysis, In Press.

Olanrewaju, A., Tat. L.L., Tan, S. Y., Naoto, M., Aziz A. A. (2016) Analysis of Economic Determinants of Affordable Housing Prices. In Lau, H. H., Tang, F. E., Ng, C. K., and Singh, A. (eds.) Integrated Solutions for Infrastructure Development. SBN: 978-0-9960437-3-1.

Opoku,R. Abdul-Muhmin A (2010) Housing preferences and attributes importance among low-income consumers in Saudi Arabia, Habitat International, 34 (2010), pp. 219–227.

REHDA (Real Estate and Housing Developers' Association Malaysia 2016) MIER’s Residential Property Survey Report 4Q 2015. http://rehda.com/

REHDA (Real Estate and Housing Developers’ Association Malaysia, 2017) Rehda’s House Buyers Survey 2017. The Star (Tuesday 25 April 2017), Poll: Majority of Malaysians want to own home in next months.

Sekaran, U. Bougie, R (2010) Research methods for business: a skill building approach. 5th Edn, John Wiley and Sons, Limited, UK.

Tan, T.H. & Khong, K.W. (2012). The Link between Homeownership Motivation and Housing Satisfaction, International Journal of Economic and Management, Vol. 6 issue 1, 1 -12.

UN-HABITAT (2011). Affordable Land and Housing in Asia’. UNON, Publishing Services Section, Nairobi.

Whitehead, C. and Monk, S. (2011), Affordable home ownership after the crisis: England as a demonstration project, International Journal of Housing Markets and Analysis, Vol. 4 Iss 4 pp. 326 – 340.


Woo, A. Joh, K.; Van Zandt, S. (2016), Impacts of the low-income housing tax credit program on neighborhood housing turnover. Urban Affairs Rev52, 247–279.

rics cobra 2018 value systems, location, price, distance and size. criteria that fall within...

Documents