KINIBIZ Developers turn to higher end developments not only for better profits, but because they cannot survive in the affordable housing segment, say several property developers.

Real Estate Housing Developers’ Association (Rehda) national treasurer NK Tong said yesterday that developers cannot afford to go into the affordable housing segment unless, for example, they are given land for development as a way to reduce the costs.

Tong points out that during a dialogue session on urban development held by the Ministry of Finance several weeks ago, even a representative from the Urban Development Authority (UDA) noted that it costs UDA RM150,000 to RM180,000 per house in construction costs alone for affordable houses - before the land costs are factored in.

“Even for them, a government agency, it already costs so much - the representative was pointing out that costs are high, you cannot sell cheap anymore,” stressed Tong. “You have to find ways to bring costs down.”

“One of (the ways) is land costs, and the other is to have the government build it,” suggested Tong. “Because the government doesn’t have to do it for profit, it does it for social reasons.”

Also speaking after the session yesterday, Rehda president Michael Yam echoed the housing minister’s remarks last week that there is a supply-demand mismatch in the affordable housing segment.

“As an emerging country with a young population and urban migration, there is a lot of demand but not enough supply,” said Yam, adding that this is the main reason for the issue of rising house prices seen today.

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