Madani housing blocks requirement will cause further increase in free market prices, says REHDA

• "We are committed to provide affordable housing, but the focus should be on the right location, as some areas require more affordable housing units, while some require less due to the weak demand in those areas. There should be more targeted solution rather than a one shoe fits all approach to identifying the needs,” said REHDA president Datuk Ir Ho Hon Sang.

KUALA LUMPUR (Aug 8): The suggested requirement, whereby a full block or two need to be made into Madani housing instead of a set percentage, will naturally cause a further increase in the free market prices for those who are not eligible for affordable housing, stated the Real Estate and Housing Developers' Association Malaysia (REHDA).

This includes those in the M40 group whose incomes are higher than stated in the eligibility criteria, it added.

One of the challenges this requirement may exacerbate is the mismatch of supply and demand.

“We are committed to provide affordable housing, but the focus should be on the right location, as some areas require more affordable housing units, while some require less due to the weak demand in those areas. There should be more targeted solution rather than a one shoe fits all approach to identifying the needs,” said REHDA president Datuk Ir Ho Hon Sang. (pictured)

According to the National Property Information Centre (Napic)’s latest report, 28.6% of completed but unsold residential properties in Malaysia for the first quarter of 2024 were priced at below RM300,000, highlighting this mismatch of unsold affordable housing.

Ho stated that it is already a mandatory requirement by state governments for developers to develop affordable housing, with varying requirements imposed from state to state.

“In Kuala Lumpur developers need to provide 20% Madani housing for developments above five acres, reaffirmed in the Garis Panduan Perancangan Residensi Madani Kuala Lumpur launched recently by the Minister of Federal Territories.

“The selling prices of these units range between RM150,000 to RM200,000 and the sizes are set at 700 sq ft, 750 sq ft and 800 sq ft. These requirements, as well as similar requirements outlined by other state governments, must be adhered to before developers can obtain their Kebenaran Merancang from the local authorities,” REHDA explained in a media release.

Earlier this week, Prime Minister Datuk Seri Anwar Ibrahim instructed the Federal Territories Department and the Kuala Lumpur City Hall (DBKL) to incorporate Madani housing blocks in every new residential project.

“The requirement is that one or two Madani housing blocks be included in new projects to benefit the public, as Madani housing is intended to meet the needs of not only civil servants, but also the more vulnerable B40 and M40 groups,” said Anwar.

According to the association, a major challenge facing developers has always been managing the rising costs. “The REHDA Property Industry Survey 2H 2023 and Market Outlook for 2024 revealed that the average increase in the cost of doing business was around 15% in 2H 2023, versus 13% in 2H 2022.

“As mentioned before, developers had no choice but to opt using the cross-subsidy method in order to fulfil the affordable housing requirement, essentially raising the price of free market housing to keep the price of affordable housing low, below the cost of construction,” it added.

To mitigate these issues, REHDA suggested the setting up of a national affordable housing trust where developers contribute a certain percentage of their gross development value (GDV).

“The committee of the trust – who could be a combination of the Ministry of Housing and Local Government (KPKT), the state authorities and even some REHDA representatives – can observe and analyse which part of the city or state has high demand for affordable housing, so that the affordable houses can be built strategically where the demand is, but not a flat quota that is not market-driven and causing some areas to be underprovided and other areas overprovided,” noted Ho.

To further assist buyers in being able to afford homes, REHDA also called on other industry players to do their part. Banks can offer subsidised loans for all affordable housing.

“Other incentives, such as discounts in premium charges, development charges and in Improvement Service Funds (ISFs) will also go a long way to make housing more affordable for the rakyat,” Ho added.

“REHDA will continue to encourage our members to uphold our nation-building role of providing quality, affordable homes for the rakyat in a timely and sustainable manner.”

Looking to buy a home? Sign up for EdgeProp START and get exclusive rewards and vouchers for ANY home purchase in Malaysia (primary or subsale)!