By Lee Yan Li
PETALING JAYA: As house prices are likely to remain relatively stable, industry players urged the government to take a holistic approach to ensure homeownership for the younger generation.
Mah Sing chief executive officer Ho Hon Sang suggested increasing the percentage of the Account 2 of Employees Provident Fund (EPF) from 30% to 40% of the contribution could help increase the purchaser’s cash flow to buy a house or serve a house loan.
While some might worry that it would reduce the EPF amount once they reach the retirement age, Ho explained that the middle income group’s contribution to EPF is expected to increase following the government’s plan to transform Malaysia into a high income economy.
On Tuesday, industry players shared their views in StarProperty.my’s round table titled “Overcoming Malaysia's Property Industry challenges at Budget 2017”, which was moderated by StarProperty Sdn Bhd acting assistant general manager Ernest Towle.
Most urged the government to renew the developer interest-bearing scheme (DIBS) for first-time house buyers, which would help the younger generation realize their dream of homeownership.
While the public has been bemoaning about the house prices and the lack of affordability, IJM Land managing director Edward Chong said the profits earned by developers are not as lucrative as one might think.
According to Chong, many would think the a development with an average profit margin of 20% creates huge profit for the developer, but fail to take the development period into account. As a project would usually take four to six years to complete, the average annual profit margin of a development is less than 5%.
Real Estate & Housing Developers’ Association Malaysia (Rehda) Penang branch chairman Datuk Toh Chin Leong argued that with the increases in construction cost, land prices, and compliance cost, it is not feasible to drastically reduce the house prices.
Ho added that the ever increasing compliance cost over the years alone could add up to 24% of the cost of the development in certain areas, which is double the figure for the cost of land purchases.
As matters of land falls under the jurisdiction of the state government, most speakers urged the federal government to work with the state government to ensure affordable housing is provided to the people.
Ekovest Bhd project director Christopher Yeo cited 1Malaysia Civil Servants’ Housing Programme (PPA1M) as an example of Putrajaya’s efficient effort to provide affordable housing.
“Why can’t it be a general housing policy that is opened to the general buyers and not just to civil servant?” he added.
Most argued that the government should treat homeownership as a matter of public policy rather than shifting the responsibilities to the developers from the private sector.
Citing a report that stated there is a need of 3.4 million houses to meet the demand of the urban population, Malaysian Institute of Estate Agents president Erick Kho said that housing is an issue for the public sector, and the government should come up with a comprehensive policy to deal with the matter.
Other suggestions to increase homeownership by Iwajib Property director Datuk Chew Yin Keen included Goods and Services Tax (GST) relief for construction supplies and increase the Debt Service Ratio (DSR) for lower income group.
READ MORE in the upcoming October issue of StarProperty pullout on October 5th.
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