PETALING JAYA: The government’s announcement under the 13th Malaysia Plan (13MP) to develop one million affordable housing units between 2026 and 2035, will help ease pent-up demand and improve homeownership prospects.

Zerin Properties chief executive officer Previn Singhe said the government’s target of building one million affordable homes over a 10-year period is both “bold and ambitious”.

“Beyond numbers, success will depend on building in the right places, close to jobs, transport and services, as well as ensuring these homes are designed to genuinely meet the needs of B40 and M40 families.

“This is so they do not risk becoming future overhang statistics,” he told StarBiz.

Previn said it is imperative that there are “supporting measures” to ensure this plan succeeds.

“Measures such as the improvement of existing affordable housing financing schemes, including the expansion of the rent-to-own and housing credit guarantee programmes, will be critical in widening access to homeownership for first-time and lower-income buyers.

“At the same time, making schools a mandatory component of large-scale housing projects will enhance liveability and strengthen long-term community value.

“Together, these measures push housing delivery beyond bricks and mortar –towards building integrated, future-ready communities.”

Olive Tree Property Consultants founder and chief executive officer Samuel Tan also said the move by the government to build one million affordable homes under the 13MP was “ambitious”.

“The government remains committed to ensuring access to quality, affordable and inclusive housing. As of this year, 180,000 housing units have been completed, with another 235,000 currently under construction.”

He noted that structural issues, such as the mismatch between housing supply and demand, as well as property prices that remain beyond the reach of many, continue to pose challenges.

“Selection of locations and developers are equally important. Achieving one million houses is only a quantitative target. What is more important is the qualitative target.”

TA Research said the planned increase in affordable housing supply, particularly in strategic locations, should help ease pent-up demand and improve homeownership prospects for lower- and middle-income households.

“On the demand side, improved financing mechanisms, including tiered interest rates and flexible tenure structures, are expected to enhance affordability, especially for first-time buyers.

“We are also encouraged by the government’s move to empower a central housing agency to lead planning and delivery efforts.”

The research house said this could significantly reduce inefficiencies and eliminate duplication of efforts between federal and state bodies, paving the way for more targeted and effective execution.

Tan noted that Malaysia faces a significant challenge in providing affordable housing for its citizens, with house prices often exceeding what many can afford.

“This affordability crisis is driven by various factors, including rising land costs, construction costs and a lack of sufficient affordable housing supply.

“There is also a discrepancy between the types of housing being built and the actual needs of the population, with an oversupply of high-end properties and a shortage of affordable options.”

This imbalance, said Tan, is exacerbated by factors like income inequality and variations in housing preferences across different demographics. Moreover, he said the construction industry in Malaysia needs to embrace modern technologies and innovative building methods to improve efficiency, reduce costs and enhance the quality of housing.

“The adoption of the Industrialised Building System (IBS), for example, can help accelerate construction and lower costs, making housing more accessible.”

He added that there should also be a consolidation of housing agencies to initiate and monitor housing development.

“Currently, multiple agencies are doing the same job and this increases the cost and causes confusion among the stakeholders,” Tan said.

To ensure that initiatives under the 13MP come to fruition, Previn emphasised that there is a need to “prioritise execution over announcements.”

“Malaysia’s development plans have historically struggled with delivery gaps. To avoid repeating this pattern, we must establish clear ownership and accountability structures at both federal and state levels.

“There is also a need to ensure transparent timelines, key performance indicators and public reporting mechanisms for all flagship initiatives.”

Previn also said there is a need to enable stronger inter-agency coordination, particularly between planning units, regulators and implementation bodies.

“Without robust execution frameworks, even the most well-crafted plans risk stalling.”

Another significant structural shift that has been proposed under the 13MP is the mandatory adoption of the build-then-sell (BTS) model for housing development - to be enforced through amendments to the Housing Development Act.

TA Research noted that while the intention is to curb project abandonment and enhance buyer protection, it added that the move introduces substantial funding and working capital risks for developers.

“Under the 10:90 BTS structure, developers must complete construction before receiving the bulk of sales proceeds. This could delay new launches and deter participation from smaller players with limited balance sheet strength or constrained access to project financing.

“In our view, this would accelerate market consolidation and widen the competitive gap in favour of well-capitalised players.”

That said, the research house said it does not expect the implementation to be immediate.

“Given that it requires legislative amendments, the process is likely to involve multi-stakeholder consultations and industry engagement. A rushed rollout would be disruptive, and we believe policymakers are aware of the potential implications.

“We anticipate a phased approach that balances buyer protection with developer viability, potentially through exemptions, transitional support, or segmentation by developer scale,” it said.

Previn also concurred that the BTS model is a major structural change that enhances consumer protection and market credibility, which reduces risks of poor-quality or abandoned projects.

“It will also accelerate IBS adoption, improving efficiency and delivery timelines.

“However, smaller, highly leveraged developers may face liquidity pressures, longer project cycles and higher financing costs, unless accompanied by supportive financing mechanisms or phased implementation of BTS.”

Without sufficient large, capable IBS suppliers, Previn warned that there would be bottleneck risks that would push up costs and erode affordability.

Tan meanwhile noted that currently, developers are allowed to sell houses before they are built under the “sell-then-build” model.

He noted that making the BTS model mandatory will be difficult.

“There are many obvious merits for this initiative. But it carries several problematic issues. Only the deep pocket developers can afford to implement this scheme.

“It will then be an uneven playing field for the start-ups and smaller development companies.”

Tan said the additional holding cost will be passed on to the end-purchasers, making house prices more expensive.

“This will jeopardise our Home Ownership Programme. On the other hand, it will ensure that abandoned projects are curbed. End-purchasers buy what they see ensuring that quality is maintained.

“We opine that this BTS model should not be mandatory. Developers are given the options to choose the most appropriate models. The authorities must monitor their performance to ensure quality and timely delivery,” he said.

Previn said many of the 13MP’s strategies such as the BTS model and affordable housing targets are conceptually strong, but “must be grounded in market data and developer capacity.”

“Enforcing BTS across the board without a phased rollout could tighten housing supply and raise costs in the short term

“Additionally, affordable housing should not just be “affordable to build” but also meet the preferences and needs of the target buyers,” he said.