KUALA LUMPUR: The Real Estate and Housing Developers' Association (REHDA) Malaysia today said having a full block or two for Madani housing in projects, instead of a set percentage, will increase free market prices for those ineligible for affordable housing.
Rehda president Datuk Ir Ho Hon Sang said state governments already require developers to build affordable housing, with varying requirements across different states.
"In Kuala Lumpur for example, developers need to provide 20 per cent Madani housing for developments above five acres, reaffirmed in the Garis Panduan Perancangan Residensi Madani Kuala Lumpur launched 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 square feet (sq ft), 750 sq ft and 800 sq ft," he said.
Ho said developers have 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.
"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," Ho said.
This includes those in the M40 group whose income is higher than stated in the eligibility criteria for affordable housing.
Besides this, he also said that a more targeted solution to address the issue of affordable housing is needed given the current supply and demand mismatch.
The latest report from the National Property Information Centre (Napic) revealed that 28.6 percent of completed but unsold residential properties in Malaysia for the first quarter of 2024 were priced below RM300,000, underscoring the issue of unsold affordable housing.
"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 a more targeted solution rather than a one shoe fits all approach to identifying the needs," he added.
Ho reiterated Rehda's call to establish a national affordable housing trust, where developers would contribute a percentage of their gross development value (GDV) to the fund.
"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."
"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 over provided," he said.
Additionally, the association is urging other industry participants to contribute their efforts to help make home ownership more affordable for buyers.
"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 said.
On Tuesday, Prime Minister Datuk Seri Anwar Ibrahim announced that all future housing projects must allocate one or two blocks for affordable Madani units to help lower-income groups own homes.