Measures to curb speculation in the property market and cross-subsidisation do not make for a healthy property sector in the medium to long term, according to the Real Estate and Housing Developers’ Association of Malaysia (Rehda).
Rehda president Datuk Seri Michael Yam drew attention to the affordable housing segment, which suffers the brunt of such measures like the real property gains tax (RPGT) as well as the impact of cross-subsidisation from the low-cost segment.
“Property speculation is in hotspots, not among the affordable housing community, but if the Government continues to have tightening measures, then it could affect 95% of the market,” he said at Rehda’s 2013 first-half property industry survey, noting that the secondary property market, for example, would not be able to sell well.
“We need to examine carefully the various categories of buyers and speculators and prescribe a more focused action plan against the right people,” he said, explaining that the broad brush-stroke approach of dealing with speculators had unjustly impacted other asset classes as well.
Past president Datuk Ng Seing Liong added that the hoo-hah about property price hikes was not reflective of the whole market, as steep rising prices occurred only in certain hotspots.
“Price hikes in these hotspots were reflected in the media and then caught by house buyer associations, which started asking the Government to clamp down on property speculation via the RPGT and other tightening measures,” he said, “Remember, these people are buying into a lifestyle, and hence, the price has to go up.” Ng noted that there were reasonably priced basic houses out there and that there was supply in the secondary property market. “The choice is still with the buyer, they should not just claim that prices keep going up.”
He also commented on the build-then-sell (BTS) mechanism, which he believes will negatively affect house buyers in the end, as supply falls subsequently.
“With BTS, when we start restricting supply, house prices would go up.”
Aside from the curbing measures, Yam also pointed out a need to revise the cross-subsidisation, which has also led to swelling property prices across the board.
“The low-cost subsidised housing is sold for RM42,000 when the building cost is RM100,000. So, who is paying the difference? The subsidy is passed through to other housing categories and subsequently, those who buy in these other categories,” Yam said, adding, “Thus, prices have gone up.”
To address this issue, he recommended that the Government focus on affordable housing, which could be built without a loss so that developers need not pass the cost to other buyers. “Now that low-cost housing is no longer required, the Government should focus on affordable housing, be it through the 1Malaysia Housing Programme, or PR1MA, or even developers,” he said.