In its Budget 2009 memorandum, the Real Estate and Housing Developers Association (Rehda) has proposed a number of initiatives that it hopes will provide a boost to Malaysia’s struggling property market.
Rehda notably suggests reviewing the bumiputra quota release mechanism to make it more structured and transparent.
Rehda president Datuk Ng Seing Liong has proposed an automatic release of the quota units to be in place six months after a project´s launch or when a project has reached the halfway stage in its construction, whichever is earlier.
Liong also suggests discounts for bumiputra buyers should be capped at 5 percent and only applicable for houses priced RM250,000 and below as purchasers in a higher market segment are more financially secure and do not need such discounts.
In addition the low-cost housing ceiling could be be raised to RM60,000 a unit from RM42,000 currently to mitigate the effect of increased construction costs.
A reduction or waiver of stamp duty rates on house purchases, currently between two and three percent, is another suggestion to help the demand side of the market.
Already many new project launches have been delayed to avoid unnecessary cost over-runs, now 25 percent to 30 percent higher than earlier projections.
Most developers see more challenges on the horizon with food and petrol price hikes, escalating costs of construction and expected rise in interest rates to contain inflationary pressures. Their woes have been exacerbated by the weak take-up rate that prevents them from passing on the rising costs to buyers. Many of these buyers are adopting a wait-and-see attitude especially in view of the uncertain interest rate scenario.
With sales for lower priced property expected to remain soft, more developers should consider coming up with more versatile designs and smaller projects with shorter turnaround time and better cash flows, said Liong.
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