KAJANG: The Valuation and Property Services Department has proposed the setting up of a committee to monitor the cost components of house prices.
This is in view of persistent affordability issues and rising overhang, which stood at 29,227 units worth RM17.24bil as of June 30, its director-general Nordin Daharom said. Serviced apartments and small offices as well as home offices are excluded.
The overhang volume rose by 18.1%, and 10.2% in value, from 2017’s January-June period.
The majority of the units which remained unsold nine months after completion were condominium/apartment units priced between RM500,000 and RM1mil.
Johor (5,988 units), Selangor (4,694), Penang (3,958) and Kuala Lumpur (2,350) lead in the overhang.
“Slow market absorption led to the increase in the residential overhang,” he said at the launch of the first-half property market results by the department.
To help resolve this pressing issue, Nordin is offering the department to be part of the committee which, he said, should comprise the National Housing Department, the Construction Industry Development Board, the Housing and Local Government Ministry and the technical department of the ministry.
“It can also include the Real Estate Housing Developers Association,” he said.
The objective is not to control house prices but to monitor the different costs that go into the final price borne by buyers. He said Melaka had such a committee to establish fair prices and it is proposed that this be adopted at the federal level.
“Melaka property prices remain considerably constant and manageable comparatively,” he said.
“The department would be able to guide the minimum and maximum price for a type of housing. The aim is to ensure that house prices remain manageable and affordable for different segments of the population,” he said.
The proposal came about because response has not been positive for the different cost components, including the margin of profit sought by developers.
“House prices are determined by demand and supply, premium charges, construction materials, labour and developers’ profit margin. All these go towards the final price borne by the buyer,” Nordin said.
“We want to establish a national housing system to establish buyers’ profile, their affordability, the price of their purchases and location of their purchases, but developers are not providing this information,” Nordin said, which complicated the data-collection process. It was this poor response which led to the proposal to take a leaf out of Melaka’s book.
He said for data to be useful, it has to be both integrative, up-to-date and forward-looking.
Besides the rising overhang, the other nagging concern was the growing volume of office space which at of June, stood at 232.62 million square feet (sq ft), with 26.69 million sq ft more of incoming supply. A total of 8.4 million sq ft is in the planned stage.
“I must emphasise that both issues – residential overhang and commercial space vacancy – are pertinent issues that must be addressed by all parties, particularly the local authorities and developers.” He said due diligence is needed before a development decision is made.
“Timely and accurate data is important and I urge all data providers to continue supplying data as required.” He said the department should be the main property data source in the country.
There were 149,889 transactions worth RM67.74bil, a decrease of 2.4% and 0.1% respectively from a year ago, which recorded 153,526 transactions worth RM67.83bil.
Residential launches was at 37,723 units, down 7.1% compared with 40,615 units for the first-half of 2017.