PETALING JAYA: A think tank today raised concerns over potential government-led market distortions in the housing market following the government’s plan to build a million affordable homes over the next 10 years.
IDEAS senior fellow Dr Carmelo Ferlito said government involvement in the industry may hurt it in the long run.
Ferlito regarded the target as something ambitious, considering that the entire private sector was only able to provide an average of 200,000 new units per year across all price ranges “during the best years of the property market”.
“This is what makes it impossible for the government to know what the market truly needs,” he said in a statement.
The think tank was responding to the plan by the National Affordable Housing Council to build a million affordable homes in the next 10 years.
It was reported that the council agreed to set up the One Million Affordable Homes 2018-2028 Implementation Monitoring Steering Committee, chaired by Housing and Local Government Minister Zuraida Kamaruddin.
The council also agreed to utilise wakaf land as part of the solution to build more affordable homes in Malaysia.
Ferlito said it was best to leave the market to the entrepreneurs, “since they are the players who are continuously engaged with the market process”.
He warned that any losses suffered by government enterprises involved in housing would have to be borne by taxpayers.
Ferlito noted that while the government’s intentions were commendable, they need to be careful not to intervene in the market directly and create distortions.
He said the government had previously signalled its intention to conduct open tenders to engage the private sector in providing affordable homes.
“I believe this is a move in the right direction, even when it is not optimal, rather than building houses directly through government-linked companies or ministry agencies.
“I believe there is demand for affordable houses and I also believe that only private entrepreneurs can carry out sound plans in line with real market needs.
“This does not necessarily have to be focused on home ownership, but also towards new rental schemes,” he added. - Mkini
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