KUCHING: Open-market home prices are being pushed higher as developers absorb the cost of capped affordable housing and pass it through to medium-cost units, particularly affecting the M40 segment.
Responding to remarks by Sheda Institute chairman Datuk Jeffrey Ng Tiong Lip, Sarawak Housing and Real Estate Developers’ Association (SHEDA) adviser Datuk Sim Kiang Chiok said Sarawak’s affordable housing obligations have reshaped how costs flow across the wider housing market.
“I agree with Ng that over-reliance on cross-subsidisation has contributed to higher open-market home prices. In Sarawak, a similar policy applied where developments exceeding 10 acres were previously required to build affordable housing units,” he told Sarawak Tribune.
Sim said the policy framework has since shifted.
“From 2020 onwards, developers are instead required to contribute a levy equivalent to the number of affordable units,” he said.
He highlighted the widening gap between price-controlled homes and open-market units.
“Units such as Spektra Lite and Spektra Medium homes have remained fixed at approximately RM100,000 to RM150,000 for about 900 sq ft in size,” he said.
“Over the same period, a typical double-storey terrace house has risen from around RM300,000 to today’s RM500,000,” he added.
According to Sim, these fixed-price units sit against steadily rising project-wide costs.
“These fixed prices are cross-subsidised through land costs, infrastructure provision, utilities installation and construction margins of higher-priced units,” he said.
Beyond cross-subsidisation, he said developers are grappling with a broader increase in operating and compliance expenses.
“The heaviest burden today lies in the overall cost of doing business. Rising compliance costs, escalating utility capital contributions, increased material prices, higher minimum wages and the introduction of new taxes have all significantly reduced developers’ capacity to absorb costs,” he said.
Sim added that project delivery risks are increasingly shaped by multiple pressure points that extend across the development lifecycle.
“The most common triggers behind major project delays are weak sales affecting cash flow, prolonged approvals for development, engineering and building plans, delays in utilities installation, late issuance of road certifications, occupation permits, and land enhancement premium calculations,” he said.
He identified the pre-construction phase as a key bottleneck.
“Stormwater management plans, development plans, and engineering and building approvals are the most time-consuming stages before construction can begin,” he said.
Utilities, particularly electricity, remain a major cost and scheduling challenge.
“Electricity utilities pose the biggest cost and timing challenge.
A fairer model would involve shared capital costs,” he said.
Sim also noted that stormwater requirements have added further strain on infrastructure budgets.
“Stormwater management added more concrete drains and retention tanks and ponds, which also increased infrastructure costs,” he said.
To address these challenges, Sim proposed three measures focused on approvals, financing and accountability.
“First, adopt Certification of Completion and Compliance (CCC) by qualified consultants in place of Occupation Permits issued by local authorities.
Second, improve risk-sharing between banks and developers through more flexible financing structures.
Third, impose strict accountability timelines on approving authorities.”
He said first-time buyers in the M40 group are increasingly constrained at the entry point.
“The most common constraints are the initial deposit and loan approval.
End-financing remains highly conservative, based solely on current income without recognising future earning potential, making homeownership increasingly unattainable for the M40 group.”
