Beginning June 5th, the following would happen in Negri Sembilan. The poor regardless of bumiputra or non-bumiputra can purchase landed residential 20 x 60 for RM80,000 or lower. Yes, this is not a fake news like some recent ones. This was announced and reported in The Star recently. A reader even dropped me an email asking me if the policy can be implemented. My answer was, YES, it can be implemented as long as there are subsidy from the state government for these units OR the costs can be passed on to the consumers of non-affordable units; the normal priced ones.
In Negeri Sembilan, beginning June 5, all new houses being built must comprise of 50 percent affordable ones. From this 50% affordable ones, 15% must be priced below RM80,000 and another 15% below RM250,000. The remaining 20% must be priced below RM400,000. The remaining 50% can be priced at ANY price as per the developer. Bumiputra quota is now 50% instead of 30% previously. For the houses being priced RM80,000, it must be landed residential units not smaller than 20 ft by 60 ft. There are no further bumiputra discounts for these units and it can be bought by any qualified buyers and not necessarily a bumiputra.
A check online showed that property prices in Negeri Sembilan remain lower when compared to Selangor or KL but RM80,000 for a landed is certainly a tall order. Some developers who is not able to pass the cost to the other units for the remaining 50 percent is going to cut corners and provide shoddy units. I think for smaller developers, this is not doable altogether because their smaller gross development value meant their total profits are likely to be lower and it is even harder to use the more expensive units to cover these affordable units. Land cost, when we look at the Selangor and KL land deals thus far remain low, most of the time between 15-20% but as per the article in The Star, it can go up to 30% for these Negeri Sembilan projects. I think main reason is also because the house prices there remain lower than what can be priced in KL or Selangor.
Negeri Sembilan state government said that this new policy was only after consultation with the state’s Real Estate and Housing Development Association (REHDA). If this is the case, I think REHDA Negeri Sembilan might have found a formula for their members to be able to do it. Of course, if this is proven to be doable, rest assured that many other state governments would be following Negeri Sembilan. This is because for EVERY project, half of it would be affordable units! In other words, the affordable units responsibility is now also loaded onto the shoulders of private developers. If they can do it, of course it is a win-win situation. If they could not, well, soon there would be lesser new launches and in the future, sorry to say but house prices will definitely rise. When demand remains the same but supply goes down, house prices can only go up. I wish both the state government and the state REHDA all the best.
written on 13 June 2015
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