More Incentives Needed to Encourage Affordable Housing Projects
Government incentives are important in encouraging developers to work together in providing more affordable homes to property buyers, said the Real Estate and Housing Developers' Association Malaysia (Rehda) president Datuk Seri FD Iskandar Mohamed Mansor.
"We want to build more affordable homes to help the rakyat to achieve their dreams of owning a home. But something needs to be given (by the government), you can't keep on pushing up the compliance cost, impose new policies and charge us for that" he told the reporters during the Rehda market survey results briefing today.
Escalating housing prices, which have gone beyond the affordability level of a majority of people, have been the subject of fierce debate in recent years, with many blaming developers for not offering more budget friendly products to regular wage earners.
In the survey titled "Property industry survey 1H17 and market outlook for 2H17/1H18â€, 63% of the 153 respondents in Peninsular Malaysia have expressed their interest in providing affordable homes.
However, there are three challenges that have stopped developers from realising their plans, which are high construction cost, expensive land cost or no availability of suitable land, and lack of incentives by the government.
FD Iskandar stressed that construction and infrastructure building costs, coupled with rising compliance charges on property development, have become a big challenge for developers in balancing their outlay and selling price.
"For instance, the land conversion premium has increased from 6% to 24%-25%, as the authorities evaluate the price based on future value. It's very hard for developers to keep the selling price low" he added.
Compliance costs are charges payable to various authorities, and utilities and infrastructure companies to ensure that a development meets regulatory requirements.
He noted that if the government is willing to provide more incentives such as allow higher density in building homes, assisting in infrastructure development and reduce compliance charges â€” including land conversion premiums â€” could help in encouraging developers to build affordable homes.
Rehda has also raised the matter of homebuyers facing difficulty in securing end-financing to the government and discussions are ongoing, he added.
"The main problem that property purchasers are facing today is still the difficulty in securing mortgages or the desired financing margin" he explained.
He emphasised that housing loans are considered as good debt as they enhance the asset value of the lending banks.
Meanwhile, Rehda will be announcing its budget wish list next week or early October.