Khazanah: House price controls needed for 5 years
The Khazanah Research Institute is proposing that the government have some sort of a price control over house prices over a five-year period.
This moratorium will allow for a total revamp of the national housing policy – with developers, contractors and house buyers to be regulated – to better match supply with actual demand.
“In order to buffer housing units supplied through the designated procurement method, a five-year moratorium should be applied to such units,” said the Khazanah unit in its “Making Housing Affordable” report issued today.
“The five-year period for the moratorium is deemed optimal for new housing supply to come into the market.”
Director of research and cities programme Dr Suraya Ismail said: “We have to develop measures to plan for a steady supply of housing at affordable prices.
“Next, we have to develop measures to reduce pressures leading to rapid house-price escalation.”
While the exact measures for the moratorium was not outlined, this usually means a cap on house prices or alternatively a maximum on the bank loan that can be taken for the purchase of a home.
The registry plan that the Khazanah unit proposes will also mean there will be a cap on the number of houses an individual can buy – a move that has been widely mooted to rein in speculators. Other such control measures may also be imposed.
Managing director Datuk Charon Mokhzani said: “The challenge of providing affordable homes for all households has captured the focus of policymakers.
“In Malaysia, policy initiatives relating to housing affordability have been through transferring physical or financial resources to low income households.
“Middle income households, however, are neither eligible for social housing nor able to afford private sector supplied houses.”
He explained that there is a need to shift housing policy focus away from a demand-led initiatives to reducing inefficiencies in housing supply – mainly because lower construction costs in recent years have not resulted in cheaper homes.
“It is generally perceived that high housing prices are a direct result of high land and construction costs. The report, however, indicates the contrary.
“Rising house prices is seen as a determining factor for the rise in land prices. Developers are willing to pay for increased land prices as the market price for housing increases,” resulting in a vicious upward spiral.
As such, the report concluded that Malaysia’s housing market is deemed seriously unaffordable where the median house price is 4.4 times median annual household income.
An affordable market is one where the median house price is three times median annual household income.
Source: http://www.therakyatpost.com/business/2015/08/24/khazanah-house-price-controls-needed-for-5-years/
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