Despite the prevailing oversupply of certain properties, real estate developers are unable to reduce home prices in Malaysia due to high construction and development costs, according to Rahim & Co International.
“One of the ways to solve this problem is to reduce the cost of development. This will simultaneously reduce the overall asking and selling house prices,” said the property consultancy’s director for its Petaling Jaya office, Choy Yue Kwong.
He said this amidst complaints that home prices have become so unaffordable for many Malaysians, particularly in Kuala Lumpur, Klang Valley, Penang and Johor. This has forced numerous families to rent houses or buy dwellings in remote locations.
Choy thinks that the authorities can further bring down development cost if they release more land for affordable homes and slash building-related expenses like legal and compliance fees.
“If all of these measures are granted by the government, I am sure developers would be more inclined to push their products at a lower selling price.”
Regarding the faster growth of home prices compared to income, he reckons that it will be hard to substantially increase the take home pay of Malaysians as this requires boosting productivity and this could take a long time to accomplish.
Rahim & Co’s Research Director Sulaiman Akhmady Mohd Saheh noted that housing affordability improved thanks to higher household income from 2014 and 2017. “But ever since, income levels are growing at a slower pace compared to the growth in house prices.”
Meanwhile, its Executive Chairman Tan Sri Abdul Rahim Abdul Rahman highlighted that luxury home prices in Kuala Lumpur’s heart have declined significantly.
“These units have seen prices dropping from RM2,000 psf to between RM1,500 psf and RM1,700 psf. I do not think pricing points of RM2,000 to RM2,500 psf bracket, which took centre stage three years ago would happen again, especially in the current climate.”
Hence, property developers are expected to focus this year on affordable properties costing up to RM500,000 in Klang Valley and at lower prices in other less developed states, said Rahim & Co, adding that 2018 would be challenging time for the property sector.
This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email editorialteam@propertyguru.com.my
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