High Costs of Housings Not Because of Building Costs

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PANDAN 28th AUGUST: The sharp increase in prices of houses in Klang Valley has nothing to do with building costs, but instead with speculating home buyers and sellers.

According to Housing, Building Management and Urban Development EXCO, Iskandar Abdul Samad, the soaring prices of houses are largely driven by high profit-seeking behaviour.

“Speculative behaviour is driving the increase in house prices. Uncontrolled transactions is one of the many reasons for this increase. The way I see it, housing price issues have nothing to do with building costs alone,” he said.

For instance, Iskandar said the construction cost for a two-storey terraced home with an area of 1,500 to 1,600 square foot would require between RM100 to RM150 per square foot.

However, the cost of selling a house can reach up to RM500,000 – an equivalent to RM300 per square foot.

“Two hundred ringgit for every square foot is not because of construction costs. I disagree with developers that give excuses that construction costs are high because the price of construction items is expensive,” he explained.

Iskandar believes that one of the steps that can be taken to remedy the speculations is to either reduce the financial loans for second homes down to 50 percent, or increase the RGPT tax up to 30 percent in order to prevent cavalier purchasing and selling of houses.

“In terms of house prices, we can’t put a maximum pricetag, but there should be a percentage that can be made affordable for the regular folks,” he said


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