Single authority for property market

This article first appeared in The Edge Financial Daily, on July 26, 2017.
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KUALA LUMPUR: The government is looking into establishing a single authority to monitor Malaysia’s property market, amid issues of supply and demand mismatch within the affordable housing segment.

According to Second Finance Minister Datuk Seri Johari Abdul Ghani, the definition of affordable housing differs significantly between private and public property developers.

For example, Johari said, the private sector would typically set the price for affordable homes at RM500,000 and below, whereas certain government affordable housing projects such as PR1MA are priced  below RM300,000.

Meanwhile, the Federal Land Development Authority and Syarikat Perumahan Negara Bhd set the price for their affordable housing projects this year at as low as RM45,000.

“If you look at Bank Negara Malaysia’s (BNM) rate, the real affordable house, it has to be in the region of RM200,000 and below. That is the level where a first-time housebuyer will be able to get 90% or close to 100% financing, but the supply is not there.

“You talk to the private sector, their affordable house is RM500,000,” he said during a plenary session at Invest Malaysia 2017 yesterday.

Johari pointed out that some of the affordable housing projects are developed in unsuitable areas, causing a mismatch between supply and demand.

“The problem with our property market is that there’s no single authority to supervise it. This is something the government is looking into in the near future,” he said.

Furthermore, Johari highlighted that there is an oversupply of high-end properties in Kuala Lumpur.

“Today, you look at all the high-end properties in Kuala Lumpur at night, you can see only 10% of the total units have their lights on. I think this is an unproductive investment of our money in the economy,” he said, adding that there is a need for a review of development projects to address the issue.

“At the end of the day, we want to make sure that all the resources will be allocated to the right economic activities that will translate well into our gross domestic product growth and revenue for the government,” he added.

In its Annual Report 2016, BNM recommended the setting up of a central depository as a systematic way of monitoring and managing the demand and supply of affordable housing.