4 out of 5 families stuck in low, medium-cost homes

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The PropertyGuru DataSense study shows that the government will need to continue building or subsidising affordable housing.

PETALING JAYA: Four of every five families residing in low- and medium-cost (LMC) housing will “practically end up living there for the rest of their lives”, with the remaining entering the private housing market, says a study by a property database technology company.

The PropertyGuru DataSense study examined about 7,900 LMC projects within Kuala Lumpur and Selangor and analysed about 139,500 sales transactions from the 1970s onwards, with LMC housing prices ranging from RM25,000 to RM350,000.

In a statement, PropertyGuru DataSense said it believed that those unable to leave LMC housing, which includes People’s Housing Project (PPR) flats, “may be facing a lack of options or lack of access to financial resources”.

“Those unwilling to leave may (also) feel that way because their current home could be in a strategic location close to public transport, key employment centres and amenities such as schools,” said PropertyGuru DataSense general manager Joe Thor.

“LMC housing should ideally be a transitional step in your property journey – we saw that the average period from when it was first bought until the time one exits is seven years.

“Unfortunately, this is not the case for four out of five LMC owners,” he said.

Thor said a key implication of the study is that the government will need to continue building or subsidising affordable housing.

He stressed that this “lack of upward mobility in housing” might also have some implications for planners and authorities as they try to ensure affordable and decent housing in urban centres, where land is scarce and increasingly expensive, coupled with increasing construction prices.

He said the main reason for moving out of LMC housing is that people’s need for space and privacy increases once they start having a family.

Such families would usually move to landed terrace houses, and even then, to outer districts as they are cheaper.

Thor noted that LMC housing residents who want to upgrade in Kuala Lumpur would be “severely limited” in their options, especially as the ideal housing type for LMC residents is landed terrace homes.

“There is a reason why LMC cluster homes in Kuala Lumpur saw a 537% increase in prices per square foot. It’s not about preference but rather what options are available,” he said.

He said that demand for LMC housing built in the 1970s to 1980s at what is now considered strategic locations remained robust after development finally “caught up” with these locations, such as the emergence of new business centres, or extension of urban rail and other facilities.

On the overhang of private housing, Thor suggested that the government provide assistance to the B40 group to rent from the private market through shared equity Rent-To-Own schemes.

“A build-to-rent model could also work here, with the authorities injecting part of the rental fee or adding a matching amount into a fund,” he said.

“Money in this fund can be invested, and over time, be used as downpayment for a property of their choice in future when they are ready to upgrade.”