00:00Malaysia's housing market is being distorted by cross-subsidization, a practice among private developers of charging higher prices for open market units to offset the cost of building low-to-medium cost housing, experts say.
00:16They said the practice has inflated open market prices, pushing home ownership increasingly beyond the reach of Malaysians in the M40 segment, the country's middle-income group.
00:28Earlier this month, the Real Estate and Housing Developers Association Malaysia said cross-subsidization had contributed to M40 home ownership rates, slipping below those of the B40 group, with official data showing M40 home ownership at 75.9%, compared with 76.3% among the B40.
00:50Siva Shankar of Rahim & Co. International Property Consultants said the sharpest pressure point in the housing market is no longer at the bottom but in the middle, where M40 households are increasingly locked out by eligibility rules and pricing structures.
01:08He said current income classifications fail to reflect the cost of living in major urban centers, leaving many middle-income households unable to qualify for affordable housing, while also being priced out of the open market.
01:23Chang Kim Lung, Secretary General of the National House Buyers Association said cross-subsidization occurs because private developers are tasked with building low- and medium-cost housing, a responsibility that rightfully belongs to the government.
01:39Both experts agreed on the need for coordinated policy reforms, faster approvals, revised price bans and financing models that better reflect income growth to improve housing affordability for middle-income Malaysians.
01:55Panyu Zhou, FMT.
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