By Khairul Khalid
Suraya Ismail
A report by the Khazanah Research Institute (KRI) rebuts the perception that the sharp rise in home prices in recent years is caused by expensive land costs.
The KRI report titled Making Housing Affordable, which was launched today, said that although it is generally perceived that high housing prices are a direct result of high land prices and construction costs, findings indicated the contrary.
“Rising house prices is seen as a determining factor for the rise in land prices. Developers are willing to pay for increased land prices as the market price for housing increases.
“In the context of construction costs, again, the increase in such costs is not necessarily the cause of house price increases. Malaysian construction costs have been falling with no consequent drop in house prices,” said Suraya Ismail, director of research at KRI.
Charon Mokhzani
Nevertheless, KRI managing director Charon Mokhzani was unwilling to speculate on how the plunging ringgit will affect the housing market.
“It is hard to say right now. There are too many variables. The ringgit is falling. Some imported building materials may be more expensive. But that may be offset by low oil prices,” said Charon.
The ringgit has fallen below 4.00 against the US dollar in recent weeks for the first time since the 1997-98 financial crisis.
The Malaysian housing market was classified as “severely unaffordable” by the KRI report; which found that the median house price in Malaysia is four times median household income per year. An affordable market is one where the median house is three times median annual household income.
The report recommended restructuring measures to improve the housing supply problem in the country, including revamping the procurement system in the construction industry.
It recommended a five-year moratorium on resale of affordable homes, as well as the creation of an integrated database for housing.
You must be logged in to post a comment.