Market is bound to have a mismatch of demand and supply as housing development in the country is controlled
By FARA AISYAH / Pic By HUSSEIN SHAHARUDDIN
The number of unsold Bumiputera residential lots, which is contributing much to the overall glut in the property market, is a result of a mismatch of supply and demand within the segment.
Laurelcap Sdn Bhd property valuer Kit Au Yong said the market is bound to have a mismatch of demand and supply as housing development in the country is controlled, with developers having to build and sell properties with specified quota for Bumiputeras.
“For example, there are locations that are not favourable to the Bumiputera market or pricing that is not within Bumiputera purchasers’ range. I can only guess how extensive this issue is contributing to the property overhang, as only the authority and the developers have the data.
“But yes, the fact that Bumiputera units cannot be sold to open market can delay the developers’ reaction to market demand,” he told The Malaysian Reserve.
PPC International Sdn Bhd MD Datuk Siders Sittampalam said although there are many reasons for the increasing number of unsold homes, not releasing the Bumiputera lots to the open market does not help improve the situation.
“If you look at it, affordability is one of the major issues, as the unsold Bumiputera units are more concentrated in some states which are not catering to the demand of the Bumiputera market.
“Every state has different affordability level and different Bumiputera quotas.
“Some states have high Bumiputera quotas while the demand is not there,” he said.
Real Estate and Housing Developers’ Association Malaysia president Datuk Soam Heng Choon said in a recent briefing that property developers want all states to implement the automatic release mechanism for unsold Bumiputera lots to mitigate the rise in the number of unsold properties.
He said the automatic release of Bumiputera units after a pre-designated period is already implemented in Selangor and Penang.
“It will be great if every state can follow Selangor and Penang, in the sense that developers will know that after a certain time frame, they can get the release and determine the contribution they need to give to the government,” he said in a press conference.
Soam said the automatic release mechanism could give developers a clearer picture of their cost of doing business and reduce unsold inventories.
PPC’s Siders said the automatic release mechanism is a good choice as holding the Bumiputera units for too long does not benefit developers and the market.
He added that it would be better for the Malaysian property market to have a more consistent law across the states.
Siders admits it will be hard for the federal government to implement the mechanism as land is a matter of the states.
Au Yong concurred that since all land matters lie with each state, some form of uniformity is needed to deal with the issue.
He said the automatic release mechanism will help developers and market players to operate their business without incurring more cost and time.
“If the system is adopted, I think that would be a good news for the market but I am not sure how the public will view it, especially from the socio-political point of view,” he said.
Au Yong added that all stakeholders will be able to understand the issue better if there is a more transparent data available.