It’s not easy to reduce property prices once someone has bought it. Imagine some of us bought a property for RM400,000 a few years ago. Unless we am facing financial difficulties, there is no way that I will sell it at a lower price even if you tell me recession is coming (earlier article here) or that the market is so slow and that overhang is growing. (earlier article here). However, what if the costs in producing such a home could be reduced in the very beginning? Then, perhaps starting prices could be lower?
Reminder yeah, a lower starting price still does not mean that the increase is going to be slower than the typical inflation rate yeah. This is because if the seller is selling and the buyer is willing to pay very much higher, then prices will still be rising pretty fast. Okay, perhaps we focus on the starting price first then? Here are REHDA’s suggestions to the government.
Article in borneopost.com The Real Estate & Housing Developers’ Association (REHDA) president Datuk Ir Soam Heng Choon shared the association’s hope for Budget 2020. He said, “By being able to reduce the cost of doing business, the savings can be passed on to house buyers in the form of more affordable housings.”
Some of the requirements that developers have to comply include land conversion premium, capital contribution charge (for infrastructure and utility) where some plots of land need to be surrendered for plants and machinery construction and stamp duty.
REHDA is also of the opinion that private utility companies such as Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Indah Water Konsortium Sdn Bhd (IWK), Tenaga Nasional Bhd (TNB) and Telekom Malaysia Bhd (TM) should not be imposing capital contribution charges as developers are already required to lay infrastructure at their development projects on top of bringing in new customers to the utility companies.
With regards to the current 3 per cent of Gross Construction Cost (GCC) deposited into the Housing Development Account (HDA) for each phase of the project developments, it should be reduced to 1.0 per cent or allow the withdrawal based on the progress of the development, for example, 1.5 per cent upon approval and the remaining upon 50 per cent completion.
He said, “The deposits have been adversely impacting the project cash flow of small, medium and bigger-sized developers alike, and the impact is felt more severely by bigger players as they undertake projects with bigger gross development value (GDV) and have many on-going projects at any particular time.” There are many more proposals on how to help buyers’ buy their first property too, especially with regards to financing. Do read the Article in borneopost.com
<Featured Image is courtesy of Stock Photos from Alberto Masnovo>
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