The country's soaring home prices must be addressed as soon as possible.
According to the Real Estate and Housing Developers Association Malaysia (Rehda), one of the causes of rising property prices is high compliance expenses.
Compliance expenses include levies and contributions to authorities, as well as the construction of infrastructure for utility companies within the project.
It also covers the time and other expenses that developers have to fork out in order to comply with government laws, legislation, and regulation.
According to Rehda's newest research, "Housing Forward: Understanding Costs and Sustainable Prices," regulatory costs have increased the cost of doing business for township developers and startups by 15 per cent to 25 per cent.
The report was released yesterday in conjunction with a roundtable discussion with approximately 100 property development stakeholders.
Datuk N.K. Tong, president of Rehda, stressed the importance of making housing more affordable for Malaysians.
"The reason competition 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," he said.
Other variables that contribute to the high cost of property construction include building materials, labour, finance, and land prices.
Tong said that Rehda would seek to increase its engagement with local and federal authorities in order to reduce excessive compliance costs.
He said that most impediments occur at the state and local levels, where the federal government has minimal power.
"The Ministry of Housing has a clear idea with robust regulations, but sometimes they get lost in translation with the different authorities and utilities of each state that add things to the entire process, which inevitably would cause higher house prices for the rakyat," he said.
Ng added that it is critical to analyse feedback from many stakeholders and do research to augment its previous report in order to provide more balanced perspectives and recommendations to the authorities.
Meanwhile, Rehda Institute chairman Datuk Jeffrey Ng Tiong Lip said that unlike a few decades ago when profit margins were high, developers today are burdened with various "hidden" compliance costs and make just about 15 per cent or so.
He also said that there will come a point when developers would be unable to afford those costs and would be forced to pass them on to customers.
Ng has renewed his plea for all stakeholders to continue discussing the causes of the spike in property prices.
"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 said.
Ng said Rehda Institute hopes that increasing property prices can be reduced in order to make property development more sustainable.