THE Real Estate and Housing Developers’ Association (REHDA) Malaysia has raised concerns regarding the government’s new policy requiring housing developers to allocate entire blocks for affordable “Madani” housing units.

REHDA warns that this move could inadvertently drive up prices for free market housing, impacting those ineligible for affordable housing.

REHDA president Datuk Ir Ho Hon Sang explained that while state governments already mandate affordable housing requirements for developers, the new policy could exacerbate price increases in the free market housing sector.

He noted that existing requirements vary across states, with Kuala Lumpur mandating that 20% of housing developments above five acres include Madani housing, as specified in the Garis Panduan Perancangan Residensi Madani Kuala Lumpur.

“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 sqft, and 800 sqft,” Ho stated.

He added that developers often rely on a cross-subsidy method to balance the costs of affordable housing, which involves raising prices for free market housing to offset lower prices for affordable units. This practice keeps affordable housing prices below construction costs.

“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 warned.

This increase could impact middle-income groups, such as the M40, who do not meet the eligibility criteria for affordable housing.

Highlighting a supply and demand mismatch in the affordable housing market, Ho pointed to a recent report from the National Property Information Centre (Napic), which found that 28.6% of completed but unsold residential properties in Malaysia during the first quarter of 2024 were priced below RM300,000.

“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,” he pointed out.

“There should be a more targeted solution rather than a one shoe fits all approach to identifying the needs.”

REHDA advocates for a more targeted approach to affordable housing rather than a uniform requirement.

Moreover, Ho reiterated the association’s call for the establishment of a national affordable housing trust, where developers would contribute a percentage of their gross development value (GDV) to the fund.

This trust would be managed by a committee comprising representatives from the Housing and Local Government Ministry (KPKT), state authorities, and REHDA.

“The committee of the trust - who could be a combination of the 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.”

In addition to these proposals, REHDA is urging other industry participants to collaborate in making homeownership more affordable.

Ho suggested that incentives such as discounts on premium charges, development charges, and Improvement Service Funds (ISFs) would significantly contribute to affordability for the rakyat.

The announcement follows Prime Minister Datuk Seri Anwar Ibrahim’s directive earlier this week, requiring all future housing projects to allocate one or two blocks for affordable Madani units to assist lower-income groups in becoming homeowners. - Aug 8, 2024

https://focusmalaysia.my/madani-housing-policy-could-hike-prices-for-m40-and-above-rehda-warns/