Key Takeaways

• The Housing and Local Government Ministry has finally unveiled the National Housing Policy (Dasar Perumahan Negara/DRN) 2018–2025 yesterday that outlines five focuses, 16 strategies and 57 action plans, with the objective of gathering public and private sector resources to solve the demand and supply mismatch problem.

• The five focuses include improving accessibility and affordability; quality housing for all; cohesive neighbourhood; improving coordination between housing development and transportation; and strengthening institutional relations for the National Housing Policy.

• Housing and Local Government Minister Zuraida Kamaruddin said price of houses, whether built by the government, state government or private sector, would be fixed at between RM90,000 and RM300,000, depending on the location and the average income of the local community. Also, the size of the house should be at least 900 sq ft with amenities, and developers must build houses within the specifications set for the B40 group.

• The ministry is targeting to build 1mil units of affordable homes for the B40 group within the next 10 years with the aim of 100,000 units each year continuously. The affordable houses also have a moratorium of five years, and houses can only be sold to the Housing and Local Government Ministry (KPKT) based on market price.

• Meanwhile, several programmes and policies under the DRN will take a holistic approach in handling the housing issues faced by the low income group, such as the National Home Ownership Campaign, National Community and National Affordable Housing Council which is chaired by Prime Minister Tun Dr Mahathir Mohamad. Minister Zuraida said the ministry would help promote RM22.5bil worth of unsold homes, mostly priced below RM300,000, at a property expo in March, featuring more than 30,000 completed homes. Zuraida added that discount for those houses will be at least 10%.

• This is good news for potential home buyers with the level of affordability kept between RM90,000 and RM300,000. We believe this will not have a direct impact to developers under our coverage as they do not build houses at this price range. However, properties in the range of RM500,000–RM600,000 may face some competition.

• We are positive on the National Home Ownership Campaign as it will help developers clear unsold stock while at the same time, generate cash flow from these inventories (despite lower margins), thus providing them huge savings on financing costs and alleviate the overhang situation.

• We maintain our NEUTRAL view on the property sector as we do not expect earnings surprises in the short to medium term. Our top picks for the sector are: (1) Sunway Bhd (BUY, FV: RM1.73) given that its local property launches have been generally well received due to good locations, and diversified income based; (2) E&O (BUY, FV: RM2.01) for its prime landbank, including reclamation rights on the Penang Island, strong take-up rates for new property launches and the ability to clear unsold units; and (3) Mah Sing (BUY, FV: RM1.21) for its quick turnaround property development model.

Source: AmInvest Research - 29 Jan 2019