KUALA LUMPUR: The previously steep rise in prices of Malaysian homes is gradually tapering off.
Urban Wellbeing, Housing and Local Government minister Datuk Abdul Rahman Dahlan today said the house price index has decreased from 12.2 per cent in the fourth quarter of 2012 to 5.9 per cent in the second quarter of 2015.
In winding up the ministry's debate on Budget 2016 at the committee level in the Dewan Rakyat, he said the government was committed to keeping the price of housing units in check, through methods such as deferring the build-then-sell policy on developers.
"This was because smaller developers would not be able to complete construction first before collecting any payment from buyers, and this resulted in a lower supply of homes in the market, thus leading to higher prices. And we know that home affordability has been an issue among Malaysians. If we look at the statistics, there is still price inflation, but the increase in rate has been reduced," he said.
Bank Negara Malaysia had reported that the housing index in Malaysia had decreased to 4.10 percent in the first quarter of 2015 from 7 percent in the fourth quarter of 2014.
“We need to consider our priorities here. I cannot take that risk by implementing the build-then-sell policy now. By solving a problem (implementing policy) we will face a bigger problem of inflated housing prices. It's better for us to delay the implementation to slow down the price increase as we want to ensure more houses available in the market to keep housing prices under control,” he said, addressing concerns raised by members on the deferment of the policy, that had caused buyers to suffer from abandoned projects.
On this, Rahman said the number of ‘sick’ projects were considerably small.
There were only 226 abandoned projects involving 60,895 housing units out of the 3,772 projects since 2009 (until Oct 30) in Peninsular Malaysia, he said.
"Out of the number, 173 abandoned projects involving 47,100 units were revived and completed.
Meanwhile, 20 abandoned projects are in the revival process, and the remaining 33 projects are in planning stage.
“Yes, we understand the predicament faced by buyers but we can't take the risk of creating bigger problems by implementing the policy now,” he said.
"Furthermore, not all developers have the capacity, especially financially to build the homes first as it is common for them to get progressive payment through housing deposits to cover construction costs. To address house buyers' issues, we have tightened (amended) laws (including Housing Development (Control and Licensing) to protect them from errant developers," he said.