On 8th February 2018 at the Ninth Session of the World Urban Forum (WUF9), Khazanah Research Institute (KRI) hosted a dialogue session entitled “Making Housing Affordable: Developers or Government to Play a Bigger Role?”. The session discussed the prevailing challenges of Malaysia’s housing market and the corrective policy options, with esteemed guest speaker Dato’ Soam Heng Choon, Deputy President of the Real Estate and Housing Developers Association Malaysia (REHDA), along with other participants of WUF9, sharing their views.
Making Housing Affordable: Developers or Government to Play a Bigger Role?
In conjunction with the Ninth Session of the World Urban Forum (WUF9), the first ever session to focus on the implementation of the New Urban Agenda, Khazanah Research Institute (KRI) held a side event to discuss the topical issue of affordable housing.
Laying the backdrop of the afternoon’s discussion, Dr Suraya Ismail, Director of Research at KRI, presented updated findings from KRI’s Making Housing Affordable report. In her presentation, Dr Suraya provided an overview of the state of Malaysia’s housing market, highlighting the prevailing issues of housing affordability and the underlying structural issues in the construction industry, followed by recommendations on the possible corrective policy responses.
In particular, Dr Suraya highlighted how interventions in the housing market have largely been on the demand side, by making housing financing cheaper or providing subsidies for home-buyers. Meanwhile, the supply side interventions have been by direct provision of low-cost houses or subsidising housing costs. These measures are unsustainable as they can drive price increases, result in more household debt, and incur opportunity costs on government finances that potentially could be used more productively. Dr Suraya concluded that it is far more efficient to enhance capacity in the supply side to develop a sustainable and responsive housing sector that caters for all sections of the population
Dato’ Soam Heng Choon, Deputy President of the Real Estate and Housing Developers Association Malaysia (REHDA), was then invited to share his views as a representative of housing developers in Malaysia. Amongst his discussion points, Dato Soam further elaborated on the cost factors borne by housing developers and its impact on developers’ ability to deliver housing that is priced affordably. He highlighted that there are other costs borne by developers other than construction costs, namely compliance costs, which have to be accounted for and acknowledged when policy responses are formulated.
Accordingly, Dato' Soam alluded that policies targeting developers to improve productivity and reduce construction costs may not be entirely sufficient in making housing affordable. Therefore, making housing affordable for the general public will require actions from more than just developers, namely the Federal and State governments. Dato’ Soam acknowledged that developers nevertheless have a role in innovating and improving construction methods for greater efficiency, while governments ought to ensure developers are not overburdened with other costs. At the same time, housing provisions by governments ought to be focused on social housing for the lower end of income earners.
Following an exchange between Dr Suraya and Dato’ Soam the session continued with questions and views from the audience.
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