PETALING JAYA: The National House Buyers Association (HBA), in its call for the government to address the escalating prices of property, wants the government to regulate the profit margins of property developers for houses in the “affordable” category.
“Let’s say for example, the government should give a 20% profit for housing developers who currently take a 15% profit. Even with the 5% 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, will be eradicated,” HBA secretary-general Chang Kim Loong told SunBiz.
“The formula is simple. The prices of building components like cement, steel per square foot and sand are regulated by the government. In addition to that, professional fees (architects, lawyers, engineers and surveyors) are also regulated with processing fees to the local council, which are standardised. Compliance cost are also pre-determined,” he said.
In addition, land prices can be identified by the Finance Ministry’s Property and Valuation Department.
Chang said the price control mechanism to cap the profit margins of property developers should be implemented for house prices in the “affordable” category, and should cascade downwards to all parties involved in the building process including sub-contractors, suppliers and vendors.
“The prices of houses have become ridiculous. A terrace house 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 well,” he added.
Chang said the association has been warning the government for many years of property prices that have risen beyond the reach of the majority, which would result in a “homeless generation” but lamented that the housing programmes implemented are not holistic solutions.
Commenting on the push to build “affordable” homes priced between RM500,000 and RM1 million, Chang said instead of merely looking at the selling price, factors such as the size and location should also be considered as these determine the suitability of the home.
“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 styled shoe boxes that are totally unsuitable for any family, with even just one child,” he said.
Last month, Khazanah Research Institute said that Malaysian housing is unaffordable, with the median house price at 4.4 times median annual household income compared with an affordable market where the median house price is 3.0 times median household income.
