A choice of how to build houses

26/06/2006 The Sun

IT is good that the government has agreed in principle to introduce the build-then-sell concept for the housing industry since it will give buyers choice.

The new approach has been advocated because the current system of sell-then-build has attracted criticism for a long time due to the litany of complaints against some segments of the industry.

In particular; the plight of thousands of hapless house buyers who are left with the burden or servicing bank loan for abandoned projects has been a blot on the record of the housing Industry. In 2004,227 housing projects, consisting of over 75,300units, had been left to the elements. Their value was a staggering RM7 billion.

Surely the industry could do better.

With the build-first and sell-first methods operating side-by-side, market forces will help to decide what works best.

The argument of developers that many small players would be forced out of business if they had to build first must weighed against the plight of the countless house buyers which have been left holding the short end of the stick.

Indeed in recent years, house buyers have been able to make their pick of completed units since the property market slumped after the Asian financial crisis of 1997-98.

So, builders may get used to the idea that build then-sell could work since the economic situation makes it necessary for them to operate in such an environment anyway.

Hopefully, the wheels of the government machinery will move quickly in order for the build-then-sell concept to be put into practice in the foreseeable future. This should remove some of the uncertainty that house buyers now face when they sign on the sale and purchase agreement for a house that they dream of seeing two or maybe three years down the road.

But more groundwork remains to be done to convince other stakeholders in the industry and financial institutions in particular, to share in the risk, which mostly rests with buyers at present.