Home prices can come down if certain issues addressed, say developers

SERI KEMBANGAN (Oct 2): While the government is asking property developers to lower home prices following the Sales and Service Tax (SST) exemption on construction services and building materials, industry players said lower prices can be achieved if issues such as labour shortage and the lofty compliance and development costs are addressed.

“Yes, [the house prices can be brought down]. We developers would like to work with [the government] to bring down the house prices but there are certain issues [that need to be addressed],” said Country Heights Holdings Bhd executive chairman Tan Sri Lee Kim Yew.

He added it also requires a collective effort from other stakeholders such as contractors to achieve the target.

“The contractors must cooperate with us also. If they don’t want to cooperate, we cannot bring down the prices. And we also need to listen to them as they could be facing some challenges, like shortage of workers,” he told the audience at the Housing and Property Development Colloquium here today.

Themed “Reimagining the Housing and Property Industry in the New Malaysia”, the event is organised by Kingsley Advisory & Strategic Initiatives (Kasi) Institute. EdgeProp.my is the media partner for the event.

Lee was one of the speakers of the session entitled “Property Leaders Roundtable: The Changing Property Landscape – Where Do We Go From Here Post GE14?” which was moderated by EdgeProp.my managing director and editor-in-chief Au Foong Yee.

Meanwhile, Trinity Group Sdn Bhd founder and managing director Datuk Neoh Soo Keat who was also a speaker during the session noted that there are still a lot of professional services that are taxable under SST and coupled with the rising labour cost, the waivers equate to about a mere 3% of cost savings in housing development instead of a direct 6% cost savings.

“What we are seeing today is a lot of polices have been implemented on developers to reduce house prices but that is not going to solve the problem. Because the key is actually to increase our income level,” he said.

Neoh suggest that the government to find ways to increase income levels and tackle rising land prices, which is pushing up the housing cost and prices in the country.

Yesterday, Finance Minister Lim Guan Eng had said that land prices were out of the government's control as they were determined by market forces.

He also urged the government to review the density of housing developments to allow developers to build more houses with cheaper prices on a parcel of land.

“The public is asking the government to reduce the density [of housing development] while asking for lower house prices. This is a contradictory policy which we would like to urge the government to look into,” he said.

Meanwhile, Savills Malaysia group executive chairman Datuk Christopher Boyd, who was also present at the colloquium, said that the government should be increasing the supply of affordable houses in order to bring down the prices.

“There are so many ways to skin a cat. How about this idea – the government identifies major areas of oversupply and approaches the owners or developers and trade those unsold units for vacant state-owned lands.

“The government will then possess a whole bunch of unsold units priced at RM750,000 each and they can sell a 50% share in each of these properties to people whose budget is about RM300,000 to RM350,000. When it comes [time] to resell, the government [can] recoup its investment and the owner takes the other 50%,” he said.

On the other hand, developers who obtained vacant land from the government can develop more affordable housing there, he added.