KUALA LUMPUR: The escalating prices of building materials are anticipated to drive an increase in property prices.
A survey conducted by the Real Estate and Housing Developers' Association (Rehda) Malaysia revealed that 91 percent of 152 respondents noted a significant rise in building material prices last year compared to previous years.
Key building materials, such as sand and concrete, experienced average price fluctuations of 15 percent and 11 percent, respectively.
"Property prices continue to increase significantly from the point of view of developers who are faced with the challenges of rising costs," said Real Estate and Housing Developers' Association (Rehda) Malaysia president Datuk NK Tong.
Construction costs are expected to increase by an average of 15 per cent in the first half of 2024 (1H24).
Tong noted that this is an ongoing issue that has been exacerbated by the Covid-19 pandemic, and is not showing signs of going away in the near future.
"Ultimately, increases in building materials mean higher construction costs, which will end up hurting the rakyat. We hope that this issue will be addressed effectively and that all industry players will play their roles to ensure Malaysians are not further affected by the increase," he added.
The survey was conducted to assess the market performance in 2H23 and the outlook for 2024. A total of 152 out of over 1,500 Rehda members participated in the survey.
The survey showed that overall residential launches and performance in 2H23 experienced a downtrend compared to 1H23, but sales performance reported a marginal increase.
The findings reported that 4,627 out of 12,017 sold units were new launches in 2H23, while the rest were unsold units launched before the period under review.
"Despite new unit launches experiencing a setback due to the current industry landscape, it is heartening to see that Malaysians still see the value of residential property as a long-term investment, and as a place they and their families can call home," said Tong.
However, the survey also disclosed a higher number of unsold completed units in the RM300,001– RM400,000 category at 11 per cent compared to three per cent in 1H23.
"We find it particularly concerning that homes considered to be within the affordable homes range experienced such a high number of unsolds when these houses are much needed by the lower income groups.
"As much as this could be a sign of unaffordability among the B40 and lower M40 categories, this is also affecting developers who have taken up the cross-subsidy method to build these houses.
"Not only are the sales of their open market units affected by the higher price, but so are the sales of their affordable units that they had to cross-subsidise for," noted Tong.
For 1H24, the survey recorded that respondents are neutral towards the business and property industry outlooks due to the challenges that the industry faces.
Conversely, respondents have higher optimism for 2H24 on expectations that the market will improve.
The anticipated improvement will be buoyed by growth in the residential sector, improved purchasing power among consumers, positive prospects for business organisations and an improved domestic economic environment.
