Developers defend higher home prices

New terrace houses in a Shah Alam development. They are priced from RM891,000 (S$290,000) each.
New terrace houses in a Shah Alam development. They are priced from RM891,000 (S$290,000) each.PHOTO: SETIAALAM.COM,MY

KUALA LUMPUR • Developers say they are not solely responsible for soaring property prices.

The Real Estate and Housing Developers' Association Malaysia (Rehda) says despite heftier price tags, its members report that margins have fallen to 15 per cent this year, from double that in the past. Others, however, argue that 15 per cent margins are plenty.

Rehda president Fateh Iskandar Mansor also blames higher prices on the rising cost of compliance with government regulations, and levies on construction materials such as steel, which push up the price of the crucial component by over 60 per cent.

"The moment you put in an element like a levy, then you increase the costs unnecessarily. Cement, aggregates, tiles, bricks, we know how much we're paying and how much our neighbour(ing countries) are paying," he said.

Instead, developers - who face a growing stockpile of unsold units - have repeatedly called for financing rules to be loosened, claiming that more than half of loan applications for affordable housing are rejected.

But Bank Negara Malaysia has rejected such claims, saying loan approvals in the first five months of the year came to 74 per cent, the same as the average between 2012 and 2016. In 2016, 72 per cent of borrowers were first-time buyers of homes priced under RM500,000 (S$163,000), proving that financing was going to the right market segment.

Instead, central bank governor Muhammad Ibrahim says slower sales are a simple "issue of not having enough income and houses being too expensive". In 2010, the central bank tightened financing rules to curb speculation and spiralling prices.

Both Rehda and the House Buyers Association agree that state assistance should be targeted if the government wants to increase the supply of affordable housing, of which the central bank says there will be a shortage of a million units by 2020.

Shannon Teoh

A version of this article appeared in the print edition of The Straits Times on October 25, 2017, with the headline 'Developers defend higher home prices'. Print Edition | Subscribe