HOUSING prices are unlikely to go any lower due to an increase in compliance and regulatory costs involved in the whole value chain of housing production.

Real Estate and Housing Developers Association Malaysia president Datuk Jeffrey Ng Tiong Lip said the significant increases in labour and materials costs, as well as in upfront deposits and capital contributions, had added on to production costs, which would inevitably be reflected in house prices.

''Developers are now made to pay deposits at almost all stages of approvals and on top of that, to contribute financially towards privatised infrastructure works,'' he said this in his paper titled Property market overview-residential at the 14th National Real Estate Convention held in Kuala Lumpur yesterday.

Ng said that the high production costs had trimmed margins and prices were not expected to go down any lower but would remain stable.

With all these demands in tow, developers are finding it difficult to keep prices low, he said.

Ng added that the increased costs of compliance, if left unchecked by the authorities, would one day result in homeownership becoming too prohibitive for the general public.

''This is an undesirable trend where pricing levels are dictated not by market forces, but by hidden and inefficient compliance costs instead,'' he added.

Ng does not see the real estate industry as being out of favour this year. Instead, he believed that the current downturn in the stock market would benefit the real estate industry as it would be the preferred investment choice for purchases.

Source : The Star  26/3/2003