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Property prices should come down, as long as ….

Posted in Property, KL / Selangor

There is this event called Housing and Property Development Colloquium organised by Kingsley Advisory & Strategic Initiatives (Kasi) Institute. The theme is “Reimagining the Housing and Property Industry in the New Malaysia.” (It’s a pretty wide topic. Perhaps what they meant is that let’s restart?) Anyway, the full article in EdgeProp.my is here: Home prices can come down if certain issues addressed, says developers.  Country Heights Holdings Bhdexecutive chairman Tan Sri LeeKim Yew said, “Yes, [the house prices can be brought down]. We developers would like to work with [the government] to bring down the house prices but there are certain issues [that need to be addressed],” He added, “The contractors must cooperate with us also. If they don’t want to cooperate, we cannot bring down the prices. And we also need to listen to them as they could be facing some challenges, like shortage of workers.” 

Trinity Group Sdn Bhd founder and managing director Datuk Neoh Soo Keat pointed out that there are still a lot of professional services that are taxable under SST and coupled with the rising labour cost, the waivers equate to about a mere 3% of cost savings in housing development instead of a direct 6% cost savings. He said, “What we are seeing today is a lot of polices have been implemented on developers to reduce house prices but that is not going to solve the problem. Because the key is actually to increase our income level.”  Neoh said that the government should find ways to increase income levels and tackle rising land prices, which is pushing up the housing cost and prices in the country. (I think this is a fair request even if this cannot suddenly happen overnight. As it is, the recent announcement that the minimum wage will only be adjusted by a mere RM50 per month is a strong indication) 

Savills Malaysia group executive chairman Datuk Christopher Boyd said that the government should be increasing the supply of affordable houses in order to bring down the prices. He said, “There are so many ways to skin a cat. How about this idea – the government identifies major areas of oversupply and approaches the owners or developers and trade those unsold units for vacant state-owned lands.  The government will then possess a whole bunch of unsold units priced at RM750,000 each and they can sell a 50% share in each of these properties to people whose budget is about RM300,000 to RM350,000. When it comes [time] to resell, the government [can] recoup its investment and the owner takes the other 50%.”  (Somehow I think this is an idea which is like how Danaharta absorbed the NPLs from banks and in later years managed to even turn a profit from the NPLs it took over) Article in edgeprop.my here. 

Personally, let me wait for what our Ministry of Housing and Local Government will be announcing soon before commenting. It should be something good? As for the issues discussed in this article, I think it’s clear that the developers are saying that they too wanted prices to drop but it’s not about just the SST. The actual numbers contributed by the SST will be lower than the 6 percent exemption. As for higher density versus lower density, I think a more appropriate way of looking at it would be from the public transport point of view. Is the public transportation ready for this? If the answer is yes, then policies should be implemented to ENCOURAGE people to take them instead of driving. Having 1,000 people walking from their homes to the nearest MRT station will be okay but having 1,000 cars coming out into the main road in the morning is not. Look at how Singapore and Hong Kong ENCOURAGED their citizens and we know that this is the POLICY way.  Happy following.

written on 2 Oct 2018

Next suggested article: Isn’tit obvious that one must buy a home close to the MRT?

 

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