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Regulating the house prices will NOT be easy

Posted in Property, KL / Selangor, and Starting Property Investing

Reported in Edgeprop.my: JPPH proposes Housing Price and Cost Control Committee were two sentences from Valuation and Property Service Department (JPPH). “JPPH does not play a role in controlling the price of any property including residential property but plays a role in providing important property market indicators so that the market remains secure. House prices are usually determined by the interaction of demand and supply except for low-cost houses in the primary market in which the ceiling price has already been fixed by the state authority.” In brief, JPPH says that it does not control house prices. This was in response to an article in Sinar Harian in which it was purportedly said that only JPPH could control property prices.

However, JPPH outlined the following key components which it says will affect the cost of housing. The items are as follows:

  1. Land
  2. Premium payments
  3. Development charges
  4. Infrastructure provisions
  5. Contribution to utility providers
  6. Building materials
  7. Bridging finance and end-financing
  8. Insurance
  9. Labour
  10. Professional fees
  11. Developer’s profit margins
  12. Marketing techniques or gimmicks
  13. Cost of marketing and advertising
  14. Developer deposit
  15. Compliance with planning approval requirements

Beyond just identifying these items so that we can look into each component separately, JPPH also suggests that the Housing and Local Government Ministry’s National Housing Department monitor the minimum and maximum selling price of houses. In the new Application For Advertisement And Sales Permit outlined by the Housing Development Licensing Division of the National Housing Department, there are two items related to the housing price that are to be included in the application:

  1. List of selling prices for all housing units by type of house
  2. Minimum and maximum selling price for each type of residence.

Here’s the article for reference again. Edgeprop.my here.

I personally do not think it’s possible to control prices, not even by the government which builds over 80 percent of all the homes in a country, example Singapore. It’s not even possible in advanced property markets which the government has a lot of updated information about the property market, example Australia or Britain. Let’s stop thinking that Malaysia is so special or powerful yeah. However, if we were to monitor each of the items suggested by JPPH closely, we may be able to identify items which are contributing the most to the cost of the property and we can then seek ways to reduce it. More importantly, the ‘affordability’ factor will control the homes being built. Just look at the unsold units and we would notice that most unsold units were because of the price. People power, perhaps? Happy following.

written on 2 Oct 2018

Next suggested article: Affordability of homes getting worse or better, now and future.

 

 

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