Mitigating high development cost of low-cost housing: findings from an empirical investigation

The high development cost of Malaysian low-cost houses (LCH) remains one of the major encumbrances towards wide-scale development, and the worst hit is the low-income group. Several studies have investigated the causes with insufficient evidence and impassive in the possible policy solutions, thus, the issues remain. This paper attempts to identify the root cause and proffer possible policy solutions via an unexplored exploratory sequential mixed-methods approach. First, 40 participants were engaged and the qualitative findings were further analyzed by 149 suitable retrieved questionnaires. The 'quantilized findings' were validated by the Malaysian LCH policymakers. Findings show that provision of land and capital facilities to utility companies by housing developers, scarcity of land in cities, and construction cost increased over the years are the three major causes of high development cost. Waiving all forms of taxes for LCH, housing developers to embrace industrialized building systems, utility companies should provide land for their infrastructure and absorb the construction cost, ceiling price should be revised upward to RM65,000-RM70,000/unit (RM4.10/US$1) while the government subsidizes housing costs among others were recommended. This study adds a new perspective in mitigating high development costs by utilizing the Public Interest Theory of Regulation as one of the theoretical underpinnings.