THE Government’s move to tackle the affordable housing issue has been applauded at a recent post-budget roundtable discussion organized by the Real Estate and Housing Developers Association (REHDA). However, industry players believe that there is still questions to be answered and much to be done.
This discussion coming after the announcement of the Budget 2013 on 28 September, gathered industry players to share their thoughts on the budget and what they wished could have been better.
On The RPGT
On the increase of the Real Property Gains Tax (RPGT), it has garnered a somewhat lukewarm response from developers, but still an palatable one.
“Fifteen percent is still livable. However, I hope the Government can just let it be for a few years because we have a scenario where the RPGT was actually exempted, then brought back, then increased over two years – it gives the perception that it will be increasing every year,” said Datuk Ng Seing Liong, REHDA immediate past president.
According to Datuk Wan Hashimi Albakri of Sime Darby Property, the RPGT increase is not really necessary as the percentage of speculators is not something to worry about. In fact, some speculation is healthy for the market. He also said that the RPGT increase is moderate and manageable, and does not expect any serious repercussions.
Sharing similar sentiments, Datuk Teo Chiang Kok from the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) and past president of REHDA suggested that the RPGT is just to appease the Rakyat who are complaining about rising prices.
“At the end of the day, RPGT is only addressing the symptoms. There needs to be an improvement in supply and only then prices will be more competitive,” said Datuk Teo.
It seems we are not headed towards a property bubble of any kind. According to Datuk Fateh Iskandar, CEO of Glomac Berhad, “Of course places like Bangsar and Petaling Jaya are more expensive and young people may not afford these places. But developers are building affordable homes, at less than RM400,000 in areas just 30 minutes away from KL.”
Echoing that, Nixon Paul, President of the Malaysian Institute of Estate Agents (MIEA) said that “A lot of people who make this an issue are actually very choosy about what they buy. Everybody wants to buy from a developer because they want a new house. There are affordable houses out there; you just have to look harder. We are having a secondary property exhibition to test the waters to see how receptive people are towards the secondary market.”
Building materials and construction costs were also brought up during the discussion with New Ching Liong, President of the Building Materials Distributors Association of Malaysia (BMDAM) suggesting that while rising material prices may have an effect on house price, the real issue is the land.
Grace Okuda of the Cement and Concrete Association of Malaysia also voiced out saying that “If you take one house design and build it anywhere in Malaysia, it cost the same. The issue here is the price of land. So I believe the cost of building materials is not the high and blaming it on cement for example, is not fair.”
On Affordable Housing
It was announced in the Budget that RM1.9 billion has been allocated to build 123,000 affordable homes. While the government was applauded by industry players, there still seems to be many questions with regards to affordable housing.
“I can see a lot of challenges. PR1MA housing must be concentrated in Greater Kuala Lumpur area and prices must be up to RM400,000. Even if the government provides land for free, it is not easy to come up with affordable housing as land is only 10 percent of the selling price,” said Datuk Seri Michael Yam, President of REHDA.
According to Datuk Fateh, PR1MA cannot work alone because the budget amounts to 15,000 houses only. After they buy a few pieces of land, the money is finished. “Land is the biggest cost to development and with land in KL so expensive; can we really put affordable housing units there?”
Reiterating that sentiment, Datuk Ng said that there are a lot of mechanics as to how the budgeted amount is going to be used. “Is the money to be used to subsidize or help developers to acquire land?”
On the matter of low-cost houses, Datuk Fateh said that it should be the responsibility of the Government.
“What I would like to suggest is that private developers do not build any more low-cost housing, and instead for every low-cost unit we do not build on our land, we contribute a certain amount. Appoint SPNB as the collector of the payments and that can be its SPNB’s seed money rather than relying on government funding,” said Datuk Fateh.