Supply and demand is most significant cause of rising property prices

Property News/ 17 October 2013 Leave a comment

Work in progress: Tong says red tape also hampers efforts to reduce property prices.

Real Estate and Housing Developer’s Association (Rehda) national treasurer DatukN K Tong recently said that the escalating prices of properties, was significantly caused by the supply and demand factor.

“As land prices continue to rise, there is also the issue of not producing houses fast enough to cater to the increasing demand.

“We need to accelerate the number of units being built and this can be done when all parties work closely,” said Tong, adding that a property market report by the National Property Information Centre (Napic) showed the existing stock nationwide in the first quarter of 2013 was 4.6mil residential units (excluding kampung and estate houses).

The report also said the average housing completion yearly was 100,000 units relative to the average annual household formation, which was 140,000.

Tong also noted that the delay in issuing approvals was also a reason why property prices had increased tremendously over the years.

“When there is a delay in issuing planning approvals, development costs, which include utility costs, tend to increase, resulting in more costs passed down to house buyers,” he said.

He added that Rehda had been continously engaging with the Government and utility companies like Tenaga Nasional Bhd, Telekom Malaysia and Indah Water Konsortium Sdn Bhd, among others, to find ways to resolve the matter.

“Unfortunately, despite all these issues, the public still has the misconception that the developers are to be blamed for escalating property prices,” said Tong, adding that the best way to tackle the issue was to hasten approval time, decrease red tape and utility costs, as well as building more affordable houses to cater to the population.

While everyone has a role to play, Tong suggested that the Government should also look at ways of relocating some of the subsidies and allocate the sum for more affordable homes to be built instead.

On Aug 29, Selangor Development Corporation (PKNS) general manager Othman Omar had also said that delays in issuing planning approval can lead to an increase in development costs of about 20% to 30%, which, in turn, increases the development cost from RM5 per sq ft to RM30 per sq ft. The cost would then be passed down to the house buyer.

Othman also mentioned that outdated and inconsistent requirements from local councils also contributed to the contrasting cost of houses in different jurisdictions.

Meanwhile, Tong said the second Malaysia Property Expo (Mapex) of the year would be held from Oct 25 to 27 and it was expected to generate RM300mil in sales.

He said REHDA was confident that the property event would be more successful than the first Mapex in April, which recorded RM200mil in sales.

He said about 92 property developers would be participating in the event, which would also include several free public talks on a variety of subjects.

Source: StarProperty.my

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