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Build and sell better housing
24/05/2004 NST

NO one in his right mind would commit a large chunk of his present and future savings to a major purchase on the strength of a glossy brochure. Yet that is how most people buy their most valued asset — their homes. A majority of housebuyers survive the gamble, or have some means of living with its uncertain outcome. Others are less lucky. When the time comes for them to take possession of their completed units, they run into a wall — a sort of caveat emptor which gives little incentive to developers to compensate for falling short of their promises or not delivering at all. There are, of course, legal remedies. But these can be costly and time-consuming.

The lopsidedness of the housing market in favour of the developers has been created by demand greatly exceeding supply. The Government, anxious to provide housing for a growing population and fast-expanding economy, has thus far chosen not to interfere. Banks have been in on it too, cutting it both ways by lending bridging financing to developers and signing up prospective buyers to long-term secured loans. The consumer, caught in the middle, is disempowered in his purchasing decision the moment he puts his name on the dotted line.

An obvious solution exists to bring balance to such property transactions, and has been floated for some time: Build the units before they can be sold. The Prime Minister said on Friday that the "build and sell" concept may now have to be imposed on reluctant developers, both to ensure best practices and protect consumers. While welcoming the proposal, Housing and Local Government Minister Datuk Seri Ong Ka Ting advised caution on Saturday, saying that the concept could so upset the industry applecart as to curtail housing development, if not the economy itself.

Some concessions may be due to the smaller developers but these are no answers to a crying need for reform in the ways they do business. Indeed, "build and sell" would favour the better endowed, more reputable firms, as perhaps it should. The low end of the industry can hardly use its lack of capacities as an argument for compromising consumer guarantees and product quality. Now that the property sector has stabilised somewhat, consolidation should be encouraged by the discipline of having to build projects before bringing them to market. The sooner this is done, the better.
 

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