Sup­port for stan­dard quo­tas, prices pro­posal

> A move in the right di­rec­tion on af­ford­able homes by min­istry, says Re­hda In­sti­tute head

The Sun (Malaysia) - - SUNBIZ -

PE­TAL­ING JAYA: The Ur­ban Well­be­ing, Hous­ing and Lo­cal Govern­ment Min­istry’s move to stan­dard­ise quota and prices for af­ford­able homes is a move in the right di­rec­tion, said Re­hda In­sti­tute chair­man Datuk Jef­frey Ng Tiong Lip.

“It is def­i­nitely a move in the right di­rec­tion. Even on Re­hda’s side we would very much sup­port this idea,” he told re­porters on the side­lines of Re­hda In­sti­tute’s Bud­get Com­men­tary 2017 yes­ter­day.

Ng said re­duc­ing house prices is not easy, as there are many vari­ables in­volved in­clud­ing land, con­struc­tion and com­pli­ance costs but the min­istry’s ini­tia­tive can help to slow down the in­crease of house prices.

He said the pub­lic has a mis­con­cep­tion that de­vel­op­ers en­joy very high profit mar­gins.

“If you said this in the 70s and 80s and even in the 90s, I agree. But in the last five to eight years, a lot of the cost have moved up,” he said.

He said that profit mar­gins used to be 30-35% dur­ing the 70s up till the 90s and up till 2010, it fell to 20-30%. To­day, profit mar­gins range be­tween 10% and 20%.

Ng said mar­gins are squeezed by in­creas­ing land, con­struc­tion and com­pli­ance costs while sell­able ar­eas are also re­duced.

“For ex­am­ple if you do town­ship of 1,000 acres, if you were to get plan­ning ap­proval, 10 years ago you would have got­ten about 50-60% sell­able area. The rest would go to in­fra­struc­ture, parks, roads, drain­ing, sep­tic tanks, re­li­gious venues. If you do the same 1,000 acres to­day your sell­able area is prob­a­bly around 40-45% so you have lost at least 10-15% of your to­tal sell­able area.

“The de­vel­oper has to al­lo­cate this for com­pli­ance re­quire­ments when pre­vi­ously the de­vel­oper can de­velop it and sell. Who is go­ing to pay for those cost? That’s why cost keep go­ing up,” he said.

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