Urgent Need to Tackle Slow Sales of Bumiputera Housing Lots

PETALING JAYA: An academic has called for policy changes and incentives to stimulate the sales of Bumiputera housing lots, following a survey that found 33% of such properties remained unsold three years after completion as of June.

Assoc Prof Dr. Muhammad Najib Razali, an expert in property economics and finance at Universiti Teknologi Malaysia, was responding to a poll conducted by the Real Estate and Housing Developers’ Association (Rehda). The poll showed that 47% of unsold Bumiputera lots were priced between RM500,000 and RM700,000, while 29% were priced between RM300,000 and RM500,000.

Dr. Muhammad Najib highlighted several challenges preventing sales, with affordability being a primary concern. He emphasized the need for policy adjustments and incentives to help Bumiputera buyers afford these homes, suggesting that measures such as preferential mortgage rates or government-backed financing schemes tailored to Bumiputera could improve access to homeownership.

Although Bumiputera lots are generally offered at a 5% to 15% discount compared to non-Bumiputera properties, many potential Bumiputera buyers still find it difficult to make purchases, particularly in urban areas where the discount does little to offset high prices. Dr. Muhammad Najib also identified the slow and complex release mechanism for unsold Bumiputera units as a major issue, complicating developers' efforts to sell these properties to non-Bumiputera buyers.

“Most state governments do not allow status changes for low-cost housing but may permit it for other property types under certain conditions,” he said. He added that policies vary across states, citing Johor as an example, where the ‘Rumah Mampu Milik Johor’ units are permanently reserved for Bumiputera.

Dr. Muhammad Najib pointed out that many unsold Bumiputera lots are mid-range or luxury properties, which does not meet the demand for more affordable housing. He stressed that the issue of unsold properties affects not only Bumiputera buyers but also non-Bumiputera Malaysians, particularly those from middle and lower-income groups, as rising property prices make homeownership increasingly challenging.

Source: NAPIC

The Malaysian House Price Index for the second quarter of 2024 highlights this issue, showing a 0.9% overall increase compared to the same period in 2023. Terraced houses saw a 1.1% rise, semi-detached homes increased by 2.6%, and detached houses rose by 0.5%, while high-rise units experienced a slight 0.7% decline.

“With property prices outpacing wage growth, buyers from all backgrounds are being priced out of the market,” he explained, noting that high-rise units still average RM367,201, which is beyond the reach of many potential buyers.

He also warned that a large number of unsold units could lead to tighter credit conditions, as banks may become more cautious about lending to developers, potentially stalling new projects. A sluggish property market could also impact economic growth, affecting industries like construction, retail, and services, while diminishing investor confidence and reducing investment.

Rehda president Datuk Ho Hon Sang acknowledged the low demand for Bumiputera lots, citing the rejection of end-financing loans by banks as a significant factor contributing to the surplus of unsold homes.

“Our survey found that in the first quarter of 2024, 69% of respondents faced construction-related challenges, with the high cost of building materials severely affecting operations. Smaller developers are particularly vulnerable to these rising costs,” he said.

Datuk Ho expressed optimism that Budget 2025 would offer solutions to the industry's challenges. “With the right policies in place, the property sector can bounce back and thrive,” he added.

Dr. Muhammad Najib reiterated that offering favourable mortgage rates and government-backed financing schemes would help address the issue of unsold Bumiputera housing lots.

Source: The Sun

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