One of the issues that has hampered the provision of affordable housing by developers is the shortage of timely and accurate market knowledge on the supply and demand for these houses in the market.

This is evidenced by complaints of a shortage of affordable houses on the one hand and the significant number of unsold affordable properties on the other. No one in the market has a crystal ball to tell at which specific location, at what price point, and to whom affordable houses can be offered. This requires collaboration between government agencies and industry players. This data should come in handy and at an affordable subscription price (if any) for the benefit of all stakeholders in the housing market.

Presently, the formal source of housing transaction and development information is available on the National Property Information Centre (NAPIC) website. While property listing information is widely available in property portals such as PropertyGuru and iProperty, they do not provide the final selling prices and consist only of current or active listings.

NAPIC’s website is much more informative as it consists of pricing and market condition data, such as the number of new residential projects launched, the number of sales transactions, and their price ranges. This information is very useful for stakeholders to gauge the market conditions.

NAPIC should be commended for making these market conditions data more interactive on their website recently where online visitors can now observe the time series pattern of the market conditions (up to the district level) from this website instead of scrolling through the PDF documents. These data points are just four months behind the market. This is timely by international standards.

Providing data at a more granular level

Moving forward, NAPIC should consider providing data at a more granular level, up to the project level. This level of disclosure will be more informative. For example, developers will know precisely which areas in a district new launches took place and their sales performance. This will allow developers to make better development decisions.

Another improvement that could be made would be to expand the coverage period from the latest five quarters presently to a longer historical period (such as 15 years). A longer time series will allow stakeholders to better gauge the state of the property market.

This housing market conditions data provided by NAPIC can be matched with demographic variables (household income in particular) to infer affordability across various locations in Malaysia.

The Department of Statistics Malaysia (DOSM) can emulate its counterparts in the United Kingdom, i.e., Office for National Statistics, in tabulating the housing affordability ratio (house price/household income) for all 331 local authorities in England and Wales since 1997. Raw data in Excel format and interactive figures and maps are made available at the Office for National Statistics’ website.

The creation of housing affordability measures at a granular level is surely within the reach of DOSM. It can work together with NAPIC to generate a housing affordability ratio at the mukim or, better still, city level.

In addition, DOSM can capitalise on its household income and expenditure survey reports to generate an affordability ratio based on the residual income approach. DOSM can also make use of Belanjawanku’s estimated household expenditures to infer the housing affordability level of individual households.

This approach takes into consideration the household consumption patterns and household types on housing affordability. For instance, in addition to informing about the housing affordability level of various locations in Malaysia, the residual approach allows us to zoom in on the types of households (e.g., single, family with/without children) that can afford to own a house in a specific location.

Information on housing affordability at a granular level is informative as it allows developers to design and price houses at a level that can be afforded by the masses. The housing affordability ratio can also be used by local authorities as one of the criteria in granting the Advertising Permit and Developer’s Licence (APDL) to developers. This is done by ensuring that there are enough houses with a price range that is affordable to households near the development site.

Making housing microdata accessible for all stakeholders

The next milestone for the government should be making housing microdata accessible for all stakeholders in Malaysia. As the keeper of all property transactions/development data in Malaysia, NAPIC could emulate its counterpart in Singapore in creating an internet-based system, Real Estate Information System (REALIS), that provides historical and updated real estate transactions and development information in Singapore. This database can then be sold at an affordable price to the masses as a potential revenue source for NAPIC.

The Singapore REALIS database is available for subscription at an annual subscription price of S$1,960 that covers the following five databases: Time series, Transaction, Developers’ Sales, Rental, Project, and Stock.

REALIS’s Transaction database allows its subscribers access to historical individual property sales transactions in Singapore. Each transaction data comes with detailed property physical characteristics (size, number of bedrooms, etc.), location (address), sale types (new, resale, auction), and sale price. Importantly, this microdata can be downloaded into Excel format for further analysis by serious researchers. In the context of provision of affordable houses, the availability of historical microdata will allow policymakers to gauge the impact and effectiveness of their affordable housing programmes.

Take the offering of affordable housing programmes such as PRIMA. The availability of transaction-level data will allow researchers to quantify the impact of the provision of PRIMA houses on the pricing strategies of private developers near the PRIMA housing schemes.

We can answer the policy question of whether offering PRIMA houses leads to lower launching prices by private developers. The long historical microdata also allows us to analyse the percentage of PRIMA homeowners that chose to sell their residential units after the end of the moratorium period and the capital gain made from these transactions. These empirical findings are important in verifying and quantifying housing subsidy leakages as these affordable schemes are meant for primary long-term residence of the middle-income group.

REALIS’s Developer Sales database provides monthly updates on the number of units launched, sold and unsold private properties in Singapore. This micro data is up to the individual project level. The developer sales data provides an almost real-time market indicator to property developers to ensure they do not overbuild during a booming market.

One complaint often thrown at private developers is that they do not conduct enough market study before embarking on development projects leading to oversupplied or overhang issues in the housing market.

While big developers have the resources to conduct thorough market studies, small and medium-sized developers may not have the luxury to do so. Small developers are prone to survival risks due to lack of data for forecasting. The availability of the performance of the newly launched project up to the individual project level could be a feasible solution to mitigate this problem.

Real estate transaction info on subscription basis

Presently, some private real estate companies have come to the bandwagon in providing real estate transaction information on a subscription basis. Besides providing historical transaction microdata, databases such as PropertyGuru’s Datasense provide real-time demand and supply data derived from listing and online viewing activities on its property portal listing. This is a positive development for the property industry in Malaysia as they help in making our housing market more transparent.

I believe there is ample room for the co-existence of these micro-databases provided by the private sector with one offered by NAPIC. The former can focus on providing data analytics functions to institutional subscribers while NAPIC, as a government agency, should strive to make microdata available to the masses at an affordable price.

Together, with the creation housing affordability ratio by location and household types, these initiatives will help alleviate the unknowns (where, what and who) in the provision of affordable housing.

-- BERNAMA

Dr Wong Woei Chyuan is a Professor at the Economics and Financial Policy Institute (ECoFI), School of Economics, Finance and Banking, Universiti Utara Malaysia.