PETALING JAYA: The Real Estate and Housing Developers Association Malaysia (Rehda) will be engaging with stakeholders to address the causes of surging property prices in the country.
In its report titled “Housing Forward: Understanding Costs and Sustainable Prices,” the association revealed that compliance cost has been one of the reasons behind rising home prices.
Compliance cost includes the time and expenses incurred by developers in order to conform with government policies, legislation and regulation.
According to the Rehda report, compliance costs have increased the cost of doing business by between 15% and 25% for township developers and startups.
The report was released in conjunction with a roundtable discussion yesterday between various stakeholders in the construction industry, including representatives from bigwigs such as Gamuda Land Sdn Bhd, Glomac Bhd
, Sime Darby Property Bhd and the Works Ministry.
Rehda president Datuk N.K. Tong emphasised that it is imperative to make homes more affordable for Malaysians.
“The reason competition (between home builders) is not pulling prices down is because of these structural challenges we are facing.
“So as an institute we will be tracking changes, but our stakeholders would still want to know if compliance costs are indeed coming down.”
As such, he said the association would be looking to increase engagement with local and federal authorities on weeding out unnecessary compliance costs and acknowledge that roadblocks are usually at the state and local level, where the Federal Government has limited control.
Additionally, Tong said the widespread effects of labour shortages and escalating material expenses amid a global inflationary environment, driven primarily by energy costs, is also a major contributor to the tightening financial constraints of developers.
At the same time, Tong also told StarBiz that another potential cost that could be included as compliance expenses are levies that could be tied to environmental, social and governance (ESG) initiatives.
“The estimates from our research have not included the impact from the possible implementation and enforcement of ESG proposals in the future,” he said.
Separately, he said the global benchmark for what can be regarded as affordable housing are home prices that are at or below three times the annual median income of a nation.
With most Malaysian youths not being able to afford a home these days, Tong said it is therefore essential that Rehda continues to assist in uncovering ways to make housing more affordable.
Meanwhile, Rehda chairman Datuk Jeffrey Ng Tiong Lip said any increase in efficiency that could put compliance costs at a lower scale has to be studied.
“We are trying to go in-depth to understand the intricacies and interconnectedness between the many factors that affect house pricing and the costs of business for developers.
“There will always be a point, if margins were depressed, where builders would have no choice but to readjust the prices of homes.”
He added that there is a need to achieve a level of “inclusiveness” for the community as a whole, and for all stakeholders in the industry to be aware of and react to the relevant metrics.
Ng highlighted that Rehda has made a strong recommendation in its report for the authorities to engage various stakeholders in the housing and construction industry before they put into place new regulations or policies.He noted that this included potential new regulations that would have an impact on overall house prices and cost of business to developers.
On the other hand, Tong commented that the new government, especially the Local Government Development Ministry, has been proactive and is taking steps to ensure the industry continues to be vibrant.
“They are aware of the challenges and are focusing on finding solutions for everyone.
“But this does not negate the obstacles faced by the construction and housing industry. The global outlook is also looking cautious at the same time,” he said.
The housing industry in Malaysia contributes in excess of RM20bil annually to Malaysia’s gross domestic product, impacting at least 140 upstream and downstream industries.
As high compliance costs could substantially impact the final price of houses, Rehda said the roundtable discussion was focused on how to reduce the cost of doing business, particularly compliance costs in the housing industry and how to assist Malaysians to lower the cost of living.
