“REHDA cautions that converting entire blocks to Madani housing may increase free market prices, urging a targeted approach to balance supply and demand in affordable housing.”
Kuala Lumpur, 8th Aug 2024, 14.20pm – The proposed mandate to convert entire blocks into Madani housing, instead of a specific percentage, is likely to drive up free market prices for individuals ineligible for affordable housing, according to the Real Estate and Housing Developers’ Association Malaysia (REHDA).
This will impact those in the M40 income group, whose earnings exceed the eligibility criteria, the association noted.
One major issue this requirement could worsen is the imbalance between supply and demand.
“We are dedicated to providing affordable housing, but the focus should be on the right location. Some areas need more affordable housing units, while others need fewer due to weak demand. A more targeted approach is necessary rather than a one-size-fits-all solution,” said REHDA president Datuk Ir Ho Hon Sang.
The latest report from the National Property Information Centre (Napic) reveals that 28.6% of completed but unsold residential properties in Malaysia for the first quarter of 2024 were priced below RM300,000, underscoring this mismatch of unsold affordable housing.
Ho noted that state governments already mandate developers to build affordable housing, though the requirements vary by state.
“In Kuala Lumpur, developers are required to allocate 20% of their developments over five acres to Madani housing, as reaffirmed in the recently launched Garis Panduan Perancangan Residensi Madani Kuala Lumpur by the Minister of Federal Territories,” he said.
“The selling prices for these units range between RM150,000 to RM200,000, with sizes of 700 sq ft, 750 sq ft, and 800 sq ft. These stipulations, along with similar ones from other state governments, must be met before developers can obtain their Kebenaran Merancang from local authorities,” REHDA explained in a media release.
Earlier this week, Prime Minister Datuk Seri Anwar Ibrahim directed the Federal Territories Department and the Kuala Lumpur City Hall (DBKL) to incorporate Madani housing blocks into every new residential project.
“The requirement is that one or two Madani housing blocks be included in new projects to benefit the public. Madani housing aims to meet the needs of not only civil servants but also the more vulnerable B40 and M40 groups,” Anwar stated.
According to the association, managing rising costs has always been a significant challenge for developers. “The REHDA Property Industry Survey for the second half of 2023 and Market Outlook for 2024 showed that the average increase in business costs was around 15% in 2H 2023, compared to 13% in 2H 2022.
“As previously mentioned, developers had no choice but to use the cross-subsidy method to meet affordable housing requirements, which involved raising the price of free market housing to keep affordable housing prices below construction costs,” the association added.
To address these issues, REHDA suggested establishing a national affordable housing trust, where developers contribute a percentage of their gross development value (GDV).
“The committee of the trust, which could include representatives from the Ministry of Housing and Local Government (KPKT), state authorities, and some from REHDA, can assess and identify areas with high demand for affordable housing. This strategic approach ensures affordable homes are built where needed rather than adhering to a flat quota that leads to under or over-provision in different areas,” explained Ho.
REHDA also urged other industry players to contribute to making homes more affordable for buyers. Banks could offer subsidized loans for affordable housing.
“Additional incentives, like discounts on premium charges, development charges, and Improvement Service Funds (ISFs), would significantly enhance housing affordability for the people,” Ho added.
“REHDA will continue to encourage our members to fulfill our role in nation-building by providing quality, affordable homes for the rakyat in a timely and sustainable manner.”
