Another unintended consequence of cross-subsidy is the rise of completed but unsold properties.

PETALING JAYA: The Real Estate and Housing Developers’ Association (Rehda) Malaysia is committed towards its responsibility in assisting the government to ensure there is sufficient affordable housing for the people. On that note, Rehda Malaysia supports Prime Minister Datuk Seri Anwar Ibrahim’s statement that the current policy on affordable housing should be reviewed.  

Rehda Malaysia believes that to make housing more affordable for people, the government should be fully responsible for the delivery of affordable housing, as it was over 50 years ago, and as it is in many countries worldwide, according to a press statement from the association.

"This would eliminate the current practice of cross-subsidies that raise the costs of regularly priced housing, making it more expensive for the M40 group to afford homes. Developers are currently facing various challenges due to the affordable housing requirement that must be fulfilled to build residential development in the open market.

"Many of these issues stem from the aforementioned cross-subsidy measures that developers have to undertake, in which prices of homes in the open market have to be increased so developers can build affordable housing, which is often sold below the cost of construction," it said. 

In turn, the price increase has caused houses in the open market, targeted towards the M40, to become unaffordable. Due to this, developments that fail to attract purchasers also have an increased risk to become late, sick or abandoned. This rings especially true for projects being developed by SME developers without the financial means to cushion themselves against financial challenges, which is one of the reasons Rehda have asked for the government to take back the onus to build affordable housing. 

Another unintended consequence of higher regularly-priced housing due to cross-subsidy is the rise of completed but unsold properties, often referred to incorrectly as an overhang. 

Rehda is cognisant and grateful for the initiatives taken by the government thus far to mitigate pressing concerns in the housing and property industry such as the recent introduction of Skim Simen Rahmah to address the building materials price hike. However, much more needs to be done to ensure the recovery and sustainability of the industry for the benefit of the aspiring future homeowning rakyat. 

Rehda is ever ready to discuss and engage the government and other industry players to together come up with ways to make houses more accessible for all Malaysians, including and especially the B40, in a sustainable manner. We will continue to encourage our members to uphold our nation-building role of providing quality, affordable homes for the rakyat in a timely manner. 

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