PETALING JAYA: Controlled housing prices should be reviewed based on actual development costs, local demand and buyers’ ability to pay, rather than being adjusted solely for inflation, says Rehda Institute.
The real estate think tank said housing quotas and controlled-price requirements should be reviewed regularly to reflect changes in income levels, demographics and market demand.
Its director of research and education, T Malathi, said rigid price controls could create a gap between the cost of building a home and the price at which developers are required to sell it.
She said the shortfall would ultimately be transferred to other units in the development, raising prices for open-market buyers, particularly those in the middle-income group.
“If a house costs RM200,000 to build but has to be sold at RM100,000, there is a RM100,000 shortfall. That cost has to be paid by someone else,” she told reporters after the launch of the institute’s research report, “Housing for All”, at Wisma Rehda here today.
Malathi said a home that would otherwise cost RM600,000 could end up being priced at RM650,000 after such costs are passed on to buyers, potentially pushing it beyond their affordability or loan eligibility.
She said the cross-subsidy system had been in place since the early 1980s, but rising construction costs, land prices and household expenses meant market buyers could no longer continue absorbing the additional burden.
Rehda Institute chairman Jeffrey Ng said the current policy framework was also affecting middle-income buyers.
“Under the current system, developers are required to build price-controlled homes.
“As prices are pushed up, the M40 income group may miss out, to the point where the B40 homeownership rate has become higher than that of the M40. This is a fact we have observed, and in our view, it has to do with the policy,” he told a press conference.
Financing was also identified as a major obstacle, with Ng estimating that between 60% and 70% of prospective buyers visiting housing projects are unable to secure financing despite wanting to buy.
The institute proposed tiered financing, credit guarantees and other financing structures that better reflect buyers’ circumstances and expected income growth.
Integrating fragmented government datasets would help policymakers better assess demand and decide where, what type and how many homes should be built, it added.
Rehda Institute is expected to present the key findings of its report at the Regional Housing Conference 2026 on July 29, to be held in conjunction with the 2026 Asean Real Estate Conference.
