The challenge of creating budget-friendly homes in cities often comes down to one major obstacle: skyrocketing land prices. Kuala Lumpur’s real estate market illustrates this perfectly, with land acquisition costs averaging RM570 per square foot—far exceeding the government’s affordable housing price ceiling of RM300 per square foot.
Developers face an impossible equation when constructing these subsidized units, as land and construction expenses alone surpass the mandated selling prices. This forces them to rely on profits from higher-end projects to offset losses, creating a ripple effect across the housing market.
The current system of cross-subsidization inadvertently pushes up prices for non-subsidized homes, undermining the broader goal of housing affordability. Without alternative solutions, the financial burden on developers may discourage future affordable housing projects altogether.
Addressing this imbalance requires innovative approaches, such as government land grants or revised pricing strategies, to make affordable housing truly sustainable without distorting the wider market.