National House Buyers Association vice-president Brig Gen (R) Datuk Goh Seng Toh has called for the establishment of a price control mechanism to keep the escalation of residential property prices in check.
With the government being able to control the prices of cooking oil, sugar, petrol and other things, Goh believes that a price control in the housing arena is feasible, reported The Sun Daily.
Goh is seemingly puzzled with how the country has allowed “a laissez-faire situation to persist in the housing arena” when housing is more important compared to sugar and cooking oil.
“We’re practising certain limit and price control when we dictate the prices of affordable houses and low-cost houses so it’s a matter of extending that. Drastic measures need to be done before we end up with a homeless society,” he stated after a panel discussion on “Housing in Malaysia: Policy Discourse” organised by Khazanah Research Institute (KRI).
Data from KRI’s latest report showed that housing affordability worsened significantly from 2012 to 2014 due to supply not catering to demand.
Within this period, the median multiple affordability rose from four to 5.1 percent, while the median house price climbed at a compound annual growth rate of 23.5 percent from RM175,000 to RM280,000.
With this, Malaysia’s housing market is categorised as “severely unaffordable” and “seriously unaffordable”, as it exceeded the 3.0 limit for housing affordability.
Commenting on the issue, National Housing Department director-general Jayaselan K. Navaratnam revealed that its ministry has never thought of imposing a price control over house prices, as it is considered an open market with fair trade.
But while he believes that any form of price control will affect the economy and deter investments, he noted that all states have their own “price control” schemes in place.
“It’s not to bring down the price but to manage the price,” Jayaselan said, while pointing to Malacca, which has set suitable prices for homes.
KRI chairman Dr Nungsari Ahmad Radhi was also against the idea of price control as it could bring about a floor price and eventually lead to developers not offering anything that is below the floor price.
Image source from The Sun