Government at Fault for Rising House Prices? Taxes on Rakyat and Developers Root of Unaffordable Housing

26 Oct 2017

Malaysia’s Real Estate and Housing Developers’ Association (REHDA) insists that they are not the only ones at fault for the country’s expensive homes.

According to REHDA President Fateh Iskandar Mansor, another culprit for the unaffordable homes is the higher cost of complying with government rules. Another is the heftier levies on construction materials, which have increased the price of important materials like steel by more than 60 percent.

“The moment you put in an element like a levy, then you increase the costs unnecessarily. Cement, aggregates, tiles, bricks, we know how much we’re paying and how much our neighbours are paying.”

Moreover, REHDA noted that the profit margins of home builders have shrank to 15 percent, but others think that this is more than enough.

The group is also urging Bank Negara Malaysia (BNM) to ease its stringent lending rules. This is because half of loan applications for low-cost housing is being rejected by lenders, it claimed, adding that the number of unsold homes are growing.

However, the central bank refuted REHDA’s contention, citing that loan approvals have reached 74 percent during the first five months of 2017, which is comparable to the average seen in the past four years.

In addition, BNM noted that 72 percent of loans granted in 2016 went to first-time buyers who acquired residential properties priced below RM500,000. This means credit went to the correct market segment.

Instead, central bank governor Muhammad Ibrahim attributes the sluggish home sales to the “issue of not having enough income and houses being too expensive”. Previously, BNM introduced stricter lending rules to deter speculators and control rising prices.

Meanwhile, both the House Buyers Association (HBA) and REHDA agree that the government should provide help to boost the supply of low-cost homes, otherwise BNM forecasts that there could be a shortage of affordable dwellings by one million units by 2020.


Image sourced from Straits Times.


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Gursharan Singh
Oct 26, 2017
The high cost of houses is the rising demand and willingness of buyers to pay even when they may not have regular financial resources to service the borrowings. During my younger days people saved first and then purchased and until then rented. But to day's Y Gen are using tomorrows earnings for to day's purchases. Sadly they are being taken on a silvery path by leaders and economists and industries and savers are penalised with low returns and borrowers rewarded by low cost funds and rewarded again when they do not pay the instalments. Y GEN and DEVELOPERS WITH UNSOLD PROPERTIES SHOULD MARKET RENTING AND NOT KEEP THEM EMPTY WHILE WAITING FOR BUYERS WHO MAY NOT COME ON THE NEAR FUTURE. This will help both. MINDSET CHANGE IS NECESSARY IN CURRENT ECONOMY.

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