Monday, September 15, 2014

Affordability an issue in Teluk Kumbar's affordable housing scheme

Under the Pakatan Rakyat state government, house prices in Penang have not only been rising in the past six years but houses have also become more expensive than ever.
Affordable housing means that people, including those with low incomes, can purchase basic home and pay for the loan, personal commitments and save comfortably without budget strain.
This generally means spending less than 25% of household budgets on housing and less than 45% on transport and housing combined.
Did Chief Minister Lim Guan Eng understand the notion of housing affordability when his administration rolled out the affordable housing scheme in Teluk Kumbar in 2013?
The Teluk Kumbar project consists of 348 units each of low-medium-cost and medium-cost houses, priced between RM72,000 and RM400,000 each.
The state government has also implemented a policy whereby the purchase of the affordable home is subject to the income eligibility level.
Under the policy, the income eligibility level for a RM200,000 home is not more than RM6,000 a month, for a RM300,000 home it is not more than RM8,000 a month, while for a RM400,000 home it is not more than RM10,000 a month.
Let’s take a detailed look at the expenditures of each household income group and identify the affordability index. The following scenarios depict situations faced by a household of four living in Penang.
Table 1. Monthly expenditure of high income group
Table 1. Monthly expenditure of high income group
This affordable housing scheme as you can see is totally unaffordable to household of any income group.
What about the low-medium-cost units?
Anyone with a basic household income not exceeding RM3,500 monthly is eligible to apply for the low-medium-cost units while those with income exceeding RM3,501 are eligible to apply for the medium-cost units.
The mean household income for Penang was recorded at 4,407 per month in 2009.
The housing and transport affordable index for average Penangites is 60.02% for the purchase of a RM200,000 medium-cost units which means the housing is not not affordable to majority of Penangites.
Table 2. Monthly expenditure of average Penangites
Table 2. Monthly expenditure of average Penangites
For those with monthly income not exceeding RM3,500, the low-medium-cost units of RM75,000 are only affordable to those with income of more than RM2,300.
With the low-medium-cost units costing RM75,000, those with monthly take home pay of less than RM2,300 are condemned to hell by the state government.
The state government should realise that transportation is the second largest expense for families, yet few of our policymakers consider these costs when planning a housing scheme.
The Teluk Kumbar housing scheme is sited in a place that requires automobiles for most trips.
The housing scheme ignores the need to travel; it ignores the cost of transportation; it ignores the need to provide alternative transportation options for the people.
When transportation costs are added to the housing affordability equation, the housing scheme becomes totally unaffordable.
How can Penang become liveable when the Lim Guan Eng administration fails to address the housing affordability issues with better transportation options to help reduce our monthly expenditures?
Table 3. Housing affordability of low income group
Table 3. Housing affordability of low income group
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