Affordable Housing In Southeast Asia

In this picture taken on September 4, 2008, a view of Singapore's public housing. (AFP Photo/Roslan Rahman)

In 2017, the Southeast Asian region has recorded a combined population of over 640 million people - approximately 8.5 percent of the world’s population - as ASEAN (the Association of Southeast Asian Nations) turns 50 years old. According to a World Bank report, ASEAN is currently the world’s third largest market ahead of Japan, USA and the EU (European Union). At the same time, the region is home to some of the world’s fastest growing economies like Vietnam and the Philippines with growth rates of over six percent. The World Economic Forum also predicts that the ASEAN region will have the world’s fifth largest economy by 2020, as reported by Bloomberg. This is certainly a reflection of how far the region has progressed after decades of war and conflict.

However, ASEAN governments are finding it particularly difficult to satisfy demands for affordable homes following rapid urbanisation within the region. In Malaysia, the Central Bank of Malaysia said in its 2016 Annual Report that the deficit of affordable housing could exceed one million units in the nation by 2020. The Central Bank of Malaysia added that the supply shortfall has worsened in Malaysia - particularly between 2012 and 2014 - by the slower increase in household income (12.4 percent) relative to the rise in house prices (17.7 percent).

The Malaysian government is aware of this shortage as it continues to roll out low cost housing developments through its PR1MA (1Malaysia People’s Housing Programme) initiative. Under this programme, the Malaysian government has been developing affordable homes between the range of 23 thousand dollars and 94 thousand dollars in key strategic urban areas across the nation. However, this initiative alone is not enough. “Based on National Property Information Centre's data, less than 30 percent of new housing launches in 2015 and 2016 were for houses priced less than RM250,000 (about 60 thousand dollars), compared to 70 percent during the 2008-2009 period,” the Central Bank of Malaysia said.

As a countermeasure, Malaysia’s Second Finance Minister Johari Ghani revealed that the Malaysian government is looking at setting up a single entity to manage affordable housing issues in the country. "The problem is that there is no single body to overlook the property sector in Malaysia and that is why we have the definition of what is ‘affordable’ differing significantly from one property developer to another," Johari said to the media on July 25, 2017.

"These days, people say that RM300,000 (about 70 thousand dollars) is considered affordable when Bank Negara itself noted that affordable housing are those priced RM200,000 (about 47 thousand dollars) and below. However, you hardly can find any property priced within the RM200,000 range,” he added.

On the other hand, Singapore has had a successful history with affordable public housing. Established on February 1, 1960 the HDB (Housing & Development Board) built 54,000 flats within the next 5 years as the initiative has completely transformed the Singaporean urbanscape. Today, over 80 percent of Singapore’s resident population is currently residing in HDB flats as they have contributed to the socioeconomic growth of this island nation. In spite of that, Singaporean home values have risen significantly over the decades, reaching a peak in 2013. Following cooling measures that were put in place by the Singaporean government, Singapore’s property prices have dropped for 15 straight quarters as home values are down by twelve percent in comparison with prices in 2013. As houses become more affordable, Singapore’s home sales have recently increased amidst stronger local demand. A growing number of Myanmar expatiates working in Singapore has also driven demand for affordable homes as reported by the Myanmar Times on August 18, 2017.

Down south, the housing market in Indonesia is suffering from the lack of regulations that would address affordable housing issues of the low income group within the nation. According to the Jakarta Post, the lack of political will to manage the low income housing sector is the main reason behind this stagnation. With a total population of over 261 million people - over a third of the region’s combined population - it is surprising to note that the Indonesian government has not produced any systematic public housing programme while housing prices are kept well beyond the reach of its low income population. This is worsened by the fact that many private developers are disinterested in low cost housing projects due to low profit margins.

Nonetheless, Indonesian President Joko Widodo initiated the “One Million Houses” programme in mid-2015 to address shortages of affordable houses in the country. Following its introduction, the Indonesian government has implemented deregulation for residential property projects for low income families in order to speed up the programme. Indonesia’s Minister of Public Works and Housings Basuki Hadimuljono has also revealed that the Indonesian government will double its budget for the “One Million Houses” programme in the upcoming 2018 State Budget. Despite that, there are issues with the implementation of the programme in terms of permit delays and finding suitable locations for these housing development projects. Currently, there is a shortage of about 11.4 million houses in Indonesia.

In Thailand, the Thai Government has established the NHA (National Housing Authority) - which is attached to the Ministry of Social Development and Human Security - in February 12, 1973 to provide housing and financial assistance to low and middle income earners. According to its official website, the NHA has successfully constructed a total of 544,686 housing units between 1972 and 2006. About 75 percent of those projects were located in Bangkok (the capital city of Thailand) and its surrounding areas. Currently, the Thai government is promoting the development of affordable housing projects through the PPP (public-private partnership) scheme to cater to the low income earners and the lower middle class.

“The government is very ambitious to help those low income earners, lower middle class people as well as state officials who have just started working, to have their own houses or empower them to at least rent the houses. So the public-private partnership scheme will be allowed in this ambitious plan,” Thailand’s Deputy Prime Minister Somkid Jatusripitak said. He added that demand for affordable housing project remains high in Thailand as many low income earners and the lower middle class have yet to own a house.

Across the South China Sea, the Philippine government intends to jump start its ten year plan to solve the country’s 6.5 million housing backlog. In an article published by the BusinessMirror, the Philippine government will need to allocate an average of over 822 million dollars annually to overcome issues on illegal settlers and a further 4.49 billion dollars a year to fund socialised housing loans.

The Vietnamese government, on the other hand, has introduced a massive stimulus package amounting to 1.32 billion dollars in order to encourage social housing development in the country and to revitalise the real estate sector. Even with the introduction of such a package, private developers are still showing signs of wariness towards social housing development projects. Vietnam’s Deputy Head of the Ministry of Construction’s Housing Management and Real Estate Market Vu Van Phan has recently admitted that several businesses have even asked to withdraw from the projects. The developers have commented that a stimulus package alone is not enough to sustain the social housing programme as capitals run out. They have called for a more sustainable mechanism and institution to back the programme.

Majority of the other economies in ASEAN - particularly Myanmar and Cambodia - have shown increasing demand for affordable homes. According to Myanmar’s Ministry of Construction, the country will require an additional 4.8 million housing units by 2040 based on the nation’s population growth rate between 1983 and 2014. In Cambodia, a wave of urban migration has taken place over the past five years as Phnom Penh’s (Cambodia's capital city) population nearly doubled to 1.5 million - a figure derived from the nation's most recent census in 2012. Based on the Cambodian government’s 2014 National Housing Policy, the country will require an extra 1.1 million houses to meet demands by 2030.