Drop in house sales worrying
06/10/2006 The Star
KUALA LUMPUR: Weak market conditions and tightening of loans by banks has
caused house sales to drop, according to the Real Estate and Housing
Developers Association Malaysia (Rehda).
A recent survey by Rehda on the property market showed that a majority of the
1,100 members surveyed reported unsold housing units.
Rehda deputy president Datuk Michael Yam said while most developers’ unsold
stock levels were still manageable, the industry was facing major
“The cost of building materials has escalated in the wake of fuel price
increases, and with pricing pressures intensifying, costs are fluctuating
rapidly, resulting in uncertain supply,” he told a media briefing here
Yam said the increasing pressure of regulatory compliance costs, such as
low-cost quota policy, bumiputra quota and discount policy, and
“build-then-sell” (BTS) or 10:90 policy were cramping development.
“In order for the BTS policy to succeed, financial institutions have to play
a major role in ensuring that financing for housing projects is adequate and
forthcoming,” he said.
“The BTS policy requires house buyers to pay a 10% down payment, with the
remainder to be settled upon the completion of the house, putting developers
at a dangerous disadvantage.
“A proper legislation framework is needed to prevent buyers from backing out
on sales and purchase agreements halfway through a project, which could lead
to it being abandoned.”
He added that buyers, too, must protect themselves from being cheated by
Weakening demand and quality issues had also become a concern to industry
players, said Yam.
However, there are pockets of optimism indicated by better sales in certain
areas of Selangor, Johor, Malacca, Perak and Penang, according to the
“It is all about location. A developer is also a businessman who must make
wise decisions in encouraging better reception from buyers,” said Yam, who
is also managing director of Sunway Bhd.
In the light of the challenges, Rehda is determined to boost the industry by
focusing on three key areas – mitigating the cost of doing business,
strengthening demand, and continuing professional development of human
“This will bring about a level of competency and quality expected by the
public. Only then will our industry be able to compete with the world,” he