After several decades of a policy that forces developers in Malaysia to build Low-Cost Housing, problems are becoming obvious:
Very Low-Cost Houses
(First posted July 2006)
In some parts of Malaysia, owning a flat is now extremely affordable. The auction prices come as low as RM 12,000 (about USD 3,500). This is a fraction of the original subsidized selling price (RM 25,000), which is even lower than the construction cost (excluding land cost, about RM 30,000). It might cost more to demolish them!
These are blocks of flats in dormitory suburbs. The bricks and mortar would have met the very stringent design standards set by the government. The provision of roads, drains and other services can be said to be much too generous.
They fail because they are in the wrong location, far from sources of employment, from public transport, devoid of people and life. They were specifically planned to be isolated from the higher income residential zones, rather like leper colonies of yesteryear. Low-cost flats for low-standard people; slums from the day they were first occupied.
Whilst people in the medium or high income group have gained from the generally appreciating value of residential property, most of the buyers of low-cost flats, hold stagnating or depreciating assets.
No wonder low-cost housing is makes up a high percentage unsold property in the country. Developers are being forced to build low-cost houses that people don't really want!
Typical spanking new low cost flat, still many units available on the 3rd floor and above, more than a year after completion
Cheap houses indeed, but not for the buyers who were not able to repay their housing loans.