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Govt not serious in making homes affordable
Published on: Monday, September 28, 2015
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THE national House Buyers Association (HBA) has been warning the Government for many years that prices of property have risen beyond the reach of the majority of Malaysians and that unless it takes serious measures to tackle this issue, a “homeless generation” will emerge.Putrajaya’s housing programmes, including giving subsidies to Malaysians to own a home, are not holistic solutions to this country’s housing woes. The Government must move away from the mentality of “giving fish” to teaching people “how to fish” – in other words, empowering the public.

The Government has been providing subsidies and social housing to the poor for generations. But has that improved their lot? These subsidies / incentives come from taxpayers’ pocket. Invariably, a taxpayer who cannot afford to buy a house will be financing a house buyer through these subsidies.

Rehda’s comment on the Khazanah Research Intitute’s (KRI) statement that the Malaysian housing market is “seriously unaffordable” seems to be off tangent.

KRI’s conclusion that houses in Malaysia are seriously unaffordable is derived from facts and figures.

It is based on a formula of household income Vis-a-Vis the prevailing prices of houses at various locations.

Why and how the prices came to be so high is another subject for debate and, yes, there are many factors to be considered.

Rehda’s assertion that cost of construction materials has gone up is true to a certain extent. The basic question that begs to be answered is the percentage of cost in construction material.

Do not subcribe to the “ teh tarik” syndrome where, when the price of sugar goes up by 10 sen, the price of a glass of the brew also goes up by 10 sen! In other words, any price increase in materials becomes an excuse to hike the selling price.

On the fall in the value of the ringgit in recent months, the same question needs to be addressed – what percentage of building materials are imported and can these be replced with local sources?

On the push to build “ affordable houses” costing between RM500,000 and RM1mil, one must also look at the size, location and others considerations and not just the selling price.

Are buyers getting their money’s worth in these purchases? Yes, one can still buy a residential property in certain hotspots but we are most likely looking at studio-style shoe-boxes that are totally unsuitable for a family with even just one child.

The unbridled escalation in cost happened well down the value of the ringgit went down, so using this excuse to justify the hike in prices over the last three years does not make sense.

Allowing foreigners to buy high-end houses will have a countereffect in that developers will then focus on high-end properties, with detrimental effects.

We feel that the Government should implement a price control mechanism to cap the profit margin allowable. After all, we are very serious in controlling the prices of other daily essentials like rice, sugar, cooking oil, etc.

Isn’t a roof over one’s head equally, if not more, important than, say, sugar? And yet we allow a laissez faire situation to persist, with industry players calling the shots.

It is impossible to police morality but we can control house prices for the affordable category. The price escalation must be according to the increase in the annual income of an individual.

The Government could also control profit margins in the sale of property, noting that there were other industries where companies’ profit margins were regulated. If the Government places great control and regulation over the oil and gas industry in this country, why can’t the same be done for the housing industry where individual purchasers face the highest risk both financially and emotionally compared to the other players?

This control on the profit margin should also be cascaded downwards to all the sub-contractors, suppliers, vendors and others. Our proposal is strictly with regards to houses in the “affordable” category. For the high-end market, developers can be given freedom to manoeuvre and build as they like.

The formula is simple. The prices of building components like cement, steel persquare foot and sand are regulated by the Government. In addition, professional fees (architects, lawyers, engineers and surveyors, etc.) are also regulated, with processing fees to the local authorities having been standardised.

Comliance costs are also pre-determined. Even land prices can be identified by the Finance Ministry’s Property and Valuation Department (JPPH). For example, if one wants to identify the land price per square foot in Taman Tun or Cheras, JPPH will be able to offer the asnwer with a click of the button. Say the Government should give a 20 pc profit for housing developers who currently take a 15 pc profit. Even with the 5 pc increase, the total amount of the final price will be significantly lower than what is charged today. Even those often alleged “hidden costs” or “grease money” that developers always complain of would be eradicated.

The price of houses has become ridiculous. A terrace bouse in Cheras priced around RM750,000 would be difficult for middle class Malaysian families to afford without a back-breaking loan. With the proposed formula, the price will go down significantly to about RM350,000 to RM400,000. Ask those intelligent quantity surveyors who know the housing industry very well.

Chang Kim Loong,

Hon. Secretary-General

National House Buyers Association (HBA)


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