‘Let market forces decide home prices’

Azlan-Awang_loan

PETALING JAYA: A think tank has accused the government of being more concerned with helping property developers make money than ensuring that citizens can afford to buy houses.

Commenting on the proposal to allow developers to offer housing loans at high interest rates, Blindspot co-founder Azlan Awang said this was a way of helping developers sell off houses without suffering a significant reduction in profits despite a glut in the market.

“If the government is serious about helping house buyers, it should not intervene, but allow market forces to determine price levels,” he said in an interview with FMT.

“When there is a surplus, as reflected in the many unsold units, prices should come down. Developers must then stomach the situation and accept less profits.”

He said the government should intervene only to ensure that more people could afford to buy houses.

Azlan was responding to Urban Wellbeing, Housing and Local Government Minister Noh Omar’s recent announcement that housing developers could now apply for licences that would allow them to provide loans to property buyers at interest rates of between 12 and 18 per cent.

The announcement drew a lot of flak from various quarters.

On Wednesday, the Cabinet told Noh’s ministry to improve the policy and to come up with clear guidelines.

Also on Wednesday, the Real Estate and Housing Developers Association revealed that sales of residential houses had gone down by 52 per cent in the second half of 2015 and a further 39 per cent in the first half of 2016.

The association welcomed the ministry’s initiative and said its members were willing to give out loans for initial deposits for unsold units at interest rates well below those recommended by the ministry.

Azlan, citing statistics from the Khazanah Research Institute, said prices of houses in city areas had tripled since 2000.

“Based on the international benchmark, houses should not cost more than three times the annual median household income, which in 2014 was about RM4,500 per month,” he said.

“Currently, median house prices are up 4.5 to 5.5 times the global benchmark.”

As such, he said, the government should allow prices to drop further according to the dictates of the market.

He suggested that the federal and state governments allocate more land for the development of affordable houses.