Direction of housing sector uncertain

Published on 29th May, 2013 by New Sabah Times

KOTA KINABALU: The direction of housing development in Sabah is uncertain following the unresolved Euro debt crisis, the continuing high unemployment in USA and the recently concluded 13th general elections in Malaysia.

In view of the foregoing, investors are still cautious about making commitments, said Michael Lui Yen Sang, president of the Kota Kinabalu Chinese Chamber of Commerce & Industry (KKCCCI).

“However, real estate development is a major engine of growth leading other spheres of economic development,” he said in his opening remarks at the Seminar on Housing Development in Kota Kinabalu.

He said that over the past 10 years, Sabah’s vigorous growth had been spurred by continued property development.

Meanwhile, Datuk Chong Choon Kim, managing director of CH Williams & Talhar too was not overly optimistic about the property market due to several factors.

He said the market showed a continuous upward trend during the past five years but reckoned that the prospects for the next five years would be rather gloomy.

The BN government has allocated substantial sums of money for developing the infrastructure of the rural areas, Chong noted.

“Hence for the next five years, the government would likely reduce spending on schools, medical services such as hospitals, road construction and other essential services to cut budget deficit,” he said.

He was also not optimistic about more urban road development in Kota Kinabalu especially after the BN failed to retain Kota Kinabalu parliamentary seat and the state seats under the constituency.

“Hence, we would not see massive urban road development and opening up of more suitable land for development,” Chong said.

Nevertheless, in order to lower the land value for urban housing development, he said the government should continue to provide more urban roads.

Chong also expected housing demand to be sluggish because the young people are unable to pay for the rising prices of houses.

“Traditionally, Sabah is agro-based, and once the young people abandoned the rural life style, they tend to flock to the KK urban areas for job,” he said.

“Now in KK, over 50 per cent employees earn less than RM2,000 per month, 20 per cent earn between RM2,000 and RM3,500 per month, a further 20 per cent earn between RM3,500 and RM7,000 per month. Only 10 per cent earn more than RM7,000 per month,” Chong said.

The government has categorised houses at RM250,000 as affordable.

“For young people earning RM2,000 per month, they could only afford houses at RM150,000 with a payback period of 30 years,” Chong said.

He said only those earning RM3,500 per month could afford to buy the affordable houses.

“At the moment, the saturation point has already been reached for the high cost houses and the developers should instead build the RM250,000 affordable houses,” he said.

Chong was one of the speakers at the seminar.

Source:  http://www.newsabahtimes.com.my/nstweb/fullstory/68856