State governments should adopt the Kuala Lumpur City Hall’s (DBKL) measures to avoid building affordable housing schemes in places where there is no demand, said the Real Estate and Housing Developers’ Association (Rehda).

Rehda president Fateh Iskandar Mansor told a press conference today that housing developments larger than ten acres are required to build affordable housing on the development, even if there is no demand for such housing in the area.

As such, developers end up with affordable houses that they cannot sell and will have to put on auction, he said.

“In places (Kuala Lumpur) where they think no category of affordable homes should be built, developers are being asked to contribute, there must be a contribution. Other states can follow suit.

“In other states, in Selangor for instance - you know there is no demand in Rawang and towards the north, so don’t ask people to build. Instead of forcing people to build every unit, let’s sit down and discuss.

“Maybe you can take RM4,000 or RM5,000 for every unit you don’t build. You take this money, then the state government has got the money and they’ve got the land.

They can build in places nearer to Petaling Jaya, nearer to Shah Alam, for instance, where the demand is there,” he told a press conference at Rehda’s headquarters today.

According to Rehda’s property industry survey which was released today, for the first half of 2017, 25 percent of new residential property launches were priced below RM250,000.

Houses between RM250,001 and RM500,000 comprised 19 percent of new launches, while houses between RM500,001 and RM1 million comprised 54 percent.

The remaining two percent are priced above RM1 million up to RM2.5 million.

Iskandar said an increasing number of house buyers, now 45 percent, are also first-time house buyers.

This is followed by those upgrading from their previous houses (33 percent), investors (17 percent), and companies (five percent).

However, the total number of planned launches for the first half of the year (21,899 units) fell, well short of the number of actual launches (9,089 units), although sales performances had increased from 45 percent in the second half of last year to 48 percent in the first half of this year.

There were 14,611 planned launches in the second half of last year, compared to 13,276 actual launches.

Iskandar said the discrepancy between planned and actual launches for the first half of this year is the largest Rehda had seen.

He attributed the cause to market conditions, problems buyers faced in obtaining sufficient financing from banks, and new conditions being imposed on developers.

He said developers may plan a new property launch years in advance, but decided to postpone it later if market conditions are not favourable.

The developer may also apply to local governments to change the development plan to build smaller, lower-priced units, but approval would take between 12 to 18 months.

As for unsold properties (both residential and commercial), Iskandar said five percent are for properties below RM250,000, and another five percent were properties above RM2.5 million.

Properties between RM250,001 and RM500,000 comprise 36 percent of unsold properties, while properties between RM500,001 and RM1 million comprise 31 percent. Properties above RM1 million up to RM2.5 million comprise 23 percent.

Unsold properties are defined as properties that remain unsold three years after launch.

As with the previous two surveys, the top three reasons cited for unsold properties are problems with end-financing, followed by low demand, and properties allocated for bumiputera that have yet to be released to the open market.

The Rehda survey had a total of 153 respondents, who are Rehda members in Peninsular Malaysia.

Iskandar said the fact that low-cost housing is being built in places where there is no demand also points to a lack of data to guide decision-making.

He said the data provided by the government is six months out-of-date, and the situation can be improved.

For example, he said the number of upcoming residential property launches can be forecast by knowing the number of advertising permits and developer’s licenses issued by the Ministry of Urban Wellbeing, Housing and Local Government, which are only valid for a year.

Data on commercial properties, meanwhile, can be projected based on the number of building plans issued by local governments, which are also valid for only a year.