Analysing PR1MA programme policy changes

KUALA LUMPUR (Jan 23): While the two policy changes in the 1Malaysia People’s Housing (PR1MA) programme announced on Jan 18 were welcomed by many, some are questioning whether it is losing its direction in enabling the middle-income group to own their own houses.

The PR1MA programme was established by the government to help the middle-income group manage their cost of living in the urban areas, specifically to help them own a home amid escalating property prices.

Indeed, widening the range of eligibility of the household monthly income level from RM10,000 to RM15,000 will definitely ease the difficulty in searching for their ideal homes, especially for those living in the urban areas.

But what about shortening the moratorium period from 10 years to five years?

“The decision to reduce the moratorium period from 10 years to five years is to allow PR1MA homeowners more flexibility to monetise and plan their investment,” PR1MA chief executive officer Datuk Abdul Mutalib Alias told The Edge Financial Daily via a text response.

“Hopefully this will also attract quality property buyers of the M40 group (middle 40% for household income) as well as mature property buyers (aged 40 and above) as they do not have to wait long before they could sell or rent their property,” he added.

According to Abdul Mutalib, under the moratorium period, PR1MA homes must be owner-occupied and cannot be sold, transferred or sublet to another party, except with permission from PR1MA.

When asked about possible speculative activities by the buyers, Abdul Mutalib disagreed that it would encourage speculations as PR1MA homes are sold to genuine buyers.

“Only first-time house buyers or those with one property are allowed to purchase PR1MA homes,” he added.

Socio-Economic Research Centre executive director Lee Heng Guie via telephone said the shortening of the moratorium period is inconsistent with the PR1MA programme’s objective.

“I am not in agreement with shortening of the moratorium period; it should have been kept at 10 years,” Lee said, adding that this would encourage speculations.

Meanwhile, Dr Yeah Kim Leng, professor of economics at Sunway University Business School, mentioned that widening the eligibility range may worsen the situation for those applicants who have a joint monthly income of RM10,000 to search for houses in high-demand areas.

“With these [policy changes], it raises the issue of who gets the access to the affordable houses,” Yeah said, adding that it will invite more turnovers as people will view it as a short-term investment plan.

On the bright side, this gives buyers the flexibility; on the other hand, it loses the long-term housing objective, he said.

He noted that the slowdown in the property market may have triggered the policy changes.

PR1MA’s mandate is to build 500,000 units of homes nationwide for the middle-income group.

As of January 2017, PR1MA had a total of 231 approved projects, compromising 266,400 units, which a total of 131,980 units are in various stages of construction.

PR1MA is targeting to complete 15,000 units of homes nationwide in 2017.

To date, PR1MA has more than 1.3 million registrants.

This article first appeared in The Edge Financial Daily, on Jan 23, 2017. Subscribe to The Edge Financial Daily here.