In its editorial on Sep 22, the paper cautions against piecemeal steps to address housing woes.

Getting the property sector moving is important for any economy. The industry's links with the broader economy are wide ranging and when the housing industry does well, so does the overall economy.

Getting people to buy houses has been the main objective for the housing industry but the issue of developers granting financing to buyers of homes has been a thorny subject since the proposal was first mooted recently.

Media and public scrutiny into the subject stemmed from the fact that high interest rates could be levied on borrowers of money from housing developers.

Urban Wellbeing, Housing and Local Government Minister Tan Sri Noh Omar on Monday alluded that developers would probably charge a maximum six per cent per annum for money extended by them to potential home buyers but the fluid subject will need more clarity before the public's concerns are soothed.

A solution needs to be found from the bottom up instead of piecemeal efforts such as addressing the shortcomings in financing which would not address the issue of home ownership.

If the six per cent rate is charged going by how personal loans are structured, which are generally not collateralised, then the effective interest rate could be much higher than the interest calculated for housing loans.

The second issue is that the bridging financing seems to be for the down payment home buyers will need to pay to buy a house. With housing developers granting that money to bridge the gap between what the bank is willing to lend and the cost of a house, the proposal now suggests that 100 per cent financing is a possibility in the future to buy houses.

There are risks that come associated with such a high level of funding.

Such a scenario also appears to run against responsible lending guidelines, which Bank Negara is keen to maintain. Just yesterday, Bank Negara defended the maximum tenure of 35 years for housing loans instead of letting that duration increase.

The central bank said the fundamental issues that require resolution are affordability and the shortage of supply of reasonably priced houses. The subject of affordable homes is real but the solution to that issue should not just be left to the developers to fix and will not be addressed by developers granting money to end-buyers.

What is needed is a holistic solution. House prices need to come down for people to afford a home and for that to take place, state and federal agencies need to work together.

One of the main grouses by developers has been development charges and compliance costs. Converting land for residential purposes costs a lot of money, in fact much more than in the past. That pushes the price of a home up.

Compliance costs, such as ensuring the width of roads meet local council requirements, also reduce the amount of land developers can build houses on. The cost of drawing water and power to a site also inflates costs. For them to tackle the issue of affordability, development charges and other costs need to come down.

The federal and state governments need to work together to find an amicable solution to the housing woes of Malaysians. If costs come down, then the price of homes should drop too.

A solution needs to be found from the bottom up instead of piecemeal efforts such as allowing 100 per cent financing which would cause problems and not address the issue of affordability.

* The Star is a member of The Straits Times media partner Asia News Network, an alliance of 21 newspapers.