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Building on quality
NST EDITORIAL 25/9/2005
RAPID development can whizz past important details — until, of course,
things start to slow down. That has happened with the housing industry,
where decelerating growth has brought into focus exactly how much of the
fizzled-out building boom of the 1990s had been bought at the buyer’s
expense (if not peril). As long as demand exceeded supply and property
prices rose, buyers were willing to go up to their eyeballs in debt to
purchase homes "blind", that is, before a single brick has been laid. It
also happily suited the developers, contractors and banks to lump the
project risk on the borrowers — suited them, according to the Real Estate
and Housing Developers’ Association (Rehda), to the tune of 3.5 million
units in the last 30 years. So why change an industry model that has worked
so well for so long?
Because it hasn’t. Rehda’s numbers blur the potential for such a lop-sided
buying-and-selling arrangement to go cruelly wrong. Last year, the number of
abandoned housing projects stood at 227, worth RM7.3 billion, with most, if
not all of it, given out as loans to 50,813 buyers. Many more waited years
for their projects to be revived by Government intervention. Countless
others have called themselves lucky just to be able to move in, structural
and minor defects notwithstanding. As the sellers’ market deflates,
long-trampled consumer rights have leapt out of the peeling woodwork.
Last year, the Prime Minister suggested that the entire industry be
renovated from the ground up on the basis of building first and selling
after. Conceding that too much uncertainty could bring housing construction
to a halt, the Housebuyers Association earlier this month proposed a "10-90"
formula in which the bulk of the payment for house purchases would only be
made upon satisfactory completion of the properties.
Predictably, Rehda has cried foul. "Build then sell" would cause the
industry to shrivel, increase prices and drastically cut supply. Only the
biggest players will survive such a severe financial culling, it says,
leaving the poorer parts of the country bereft of housing investment. The
buffeted Housing and Local Government Ministry, recently accused of
foot-dragging on behalf of the construction lobby, wants the industry to
make a formal stand before submitting a memorandum to the Cabinet.
As far as its interests are concerned, Rehda is right — forcing down "build
then sell" would upset the apple cart for the smaller housing developers.
The larger ones, on the other hand, have begun to push the concept,
compelled to do so by the only growing sub-sector in an otherwise shrinking
industry. Like the problem of having too many Class F contractors dependent
on Government contracts, there may be a costly downside to such a radical
restructuring of the way the developers do business. But something has to
give if the nation’s development is to be measured less by its pace than by
its quality. |
