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Saturday, August 28, 2010

The need for affordable housing to meet demand

Rising worries over the escalating cost of living and prices of goods and services has become a hot topic among the average Malaysians these days with one of their major concerns centred around the removal of subsidies by the Government.

Their concerns are understandable as the threat of a looming inflation will further constrain the people’s purchasing power.

If prices continue to rise, very soon those who now fall under the middle-income group will find themselves “demoted” into the lower income category as the value of their ringgit shrinks.

No wonder people are taking stock of their financial position and have become more vigilant over their spending. Even the more upmarket and usually packed “buka puasa” restaurants are reporting slower business this time around.

However, the strong sales of big ticket items, including residential property and cars, show that despite their relatively high price tags, owning a house and a car are considered priorities for the majority of the populace.

In particular, demand for houses has skyrocketed in the past year and this has contributed to a sharp rise in prices.

Meanwhile, supply of houses has not caught up as fast and this has resulted in a market in equilibrium where demand still exceeds supply.

Although developers are expected to speed up on their new project launches to take advantage of the strong sales, how fast the “production line” moves will depend on the speed of the approval process at both the state and federal government levels.

Hopefully the one-stop centres (OSCs) in local authorities to consider building and development project applications are playing their roles well to ensure developers who abide by all the rules and regulations will have their building approval process expedited.

It is not unusual to hear developers still lamenting about delays at some of the local authorities which have hampered their project development time-lines.

In keeping with the spirit of the Special Taskforce to Facilitate Business (Pemudah), any unnecessary red tapes and bureaucracy should be reduced if not eliminated completely. By enhancing the market’s efficiency, it will overcome the housing supply shortage and help promote a more balanced and equitable market.

Given the strong demand for houses, this is in fact a good time for the state governments to direct their state development agencies (SEDCs) that are entrusted with building affordable housing projects for the low to middle income groups to uphold their duties diligently.

Their primary role is to undertake social and economic projects that help the lower income population. Thus, enabling more Malaysians to own houses.

Instead of competing with the private developers by getting involve in high-end property projects which are out of the reach of the average Malaysians, they should offer more affordable priced houses within the price range of between RM200,000 and RM400,000.

In view of the strong interest for landed housing these days, these SEDCs should launch more lower to medium-priced landed residential projects.

Many of the SEDCs have very prime landbank but on many occasions in the past, they have taken the short cut of selling these land to other developers instead of undertaking the projects themselves or through joint ventures.

In keeping with their social-economic roles to help the less privileged, these agencies should develop their land with a social conscience to help the people.

To attract the targeted buyers, their projects should be well planned and located in good locations with good infrastructure connectivity.

As part of their corporate social responsibility, private developers can partake in such projects by forming joint ventures with the SEDCs to lend their expertise.

Although their interest has shifted to the higher-end range of products, developers should also maintain a more balanced product portfolio with an array of low-medium to medium and higher priced projects.

Given the power of “word of mouth” in building a company’s image, developers who show they care for people’s welfare will be better appreciated and have a stronger customer following in future.

Deputy news editor Angie Ng hopes more concerted efforts will be expended to provide for more quality and affordable housing in our cities as a wholesome living environment for the people is a pre-requisite for a safe and progressive Malaysia.

By The Star

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