National Housing Department director-general Jayaselan K. Navaratnam said its ministry has never planned to implement price control of house prices as it is an open market where there is fair trade. Any move to launch price control will also impact the economy and deter investments, he added. However, he clarified that all states are already doing their own “price control”.
“It’s not to bring down the price but to manage the price,” Jayaselan said, citing Malacca, which sets a suitable price for houses.
National House Buyers Association vice-president Brig Gen (R) Datuk Goh Seng Toh suggested that there should be a price control mechanism for residential properties to avoid the escalation of prices.
“We believe price control is feasible. We control the prices of sugar, cooking oil, petrol and a whole host of other things but yet we allow a laissez-faire situation to persist in the housing arena,” he told reporters after a panel discussion on “Housing in Malaysia: Policy Discourse” organised by Khazanah Research Institute (KRI).
Goh emphasised that a roof over one’s head is more important than sugar and cooking oil, for example, where consumption of these items can be cut, and yet the country has allowed property developers to call the shots in setting house prices and let prices go up to dizzying heights.
“We’re practising certain limit and price control when we dictate the prices of affordable houses and low-cost houses so it’s a matter of extending that. Drastic measures need to be done before we end up with a homeless society,” he added.
According to KRI’s latest report “Rethinking Housing: Between State, Market and Society” launched today, housing affordability worsened significantly between 2012 and 2014 as supply did not cater to demand.
During this period, the median multiple affordability increased from 4.0 to 5.1, while the median house price increased at a compound annual growth rate of 23.5% from RM175,000 to RM280,000.
Based on the median multiple affordability, Malaysia’s housing market is categorised as “seriously unaffordable” and “severely unaffordable”, exceeding the 3.0 threshold for housing affordability.
The report also cited data which indicate that house prices in Malaysia have almost doubled since 2008 while construction costs have only increased slightly in the same period. Due to the lack of housing development cost data, the difference between normal profits and excess profits cannot be determined. The relationship between speculation, land price and house price also cannot be empirically tested without land data.
KRI chairman Dr Nungsari Ahmad Radhi disagreed with the idea of price control, saying the setting of a ceiling price will also bring about a floor price, resulting in developers not offering anything below the floor price.
Instead of price control, KRI director of research, Dr Suraya Ismail pointed to the need for regulations to deter abuse of market and the monopoly of high house prices dictated by some developers, adding that regulations must create a competitive market.