Wednesday, February 1, 2023

Property prices may increase 5% to 20% by end of the year

NewsProperty prices may increase 5% to 20% by end of the year

The selling prices of residential properties in the country will likely increase by 5% to 20% by the end of the year.

Speaking to The Star, Real Estate and Housing Developers’ Association immediate past chairman Tan Hun Beng said this price hike is triggered by the substantial increase in construction costs.

For example, he said the price of concrete has jumped 32% to RM258 per cubic metre, while steel bar prices have increased 46% to RM4,100 per tonne. In addition, the prices of metal roofing and c-purlin have increased by 60% and 95%, respectively.

Currently, Tan said the developers have yet to pass on the higher cost of building materials to customers.

“The steep hike in building material costs will impact the selling price of the incoming supply of properties by at least 5% to 20%, depending on their size and location.”

“The hike in selling prices is inevitable as developers are already paying substantially more for their raw materials,” he said.

Tan also said that he noted fewer property launches in 2022 due to high construction costs.

According to the latest National Property Information Centre (Napic) report, some 54,836 houses will enter the Penang property market over the next 3 to 4 years. About 79% of these new houses are affordable and high-end, priced from RM300,000 onwards.

At the same time, the Napic report also indicated that the unsold houses in Penang from the completed, under construction and not yet constructed categories totalled 11,540 units.

In November last year, the state government declared that Penang has the second-highest number of unsold properties in Malaysia, with 4,683 completed housing units worth RM3.66bil.

Meanwhile, CA Lim Property Surveyors Sdn Bhd principal Datuk Lim Chien Aun said the state government should take this matter seriously and come up with a strategy to tackle the issue quickly.

“A large number of unsold units is perhaps an indication that we are building houses that are not in demand due to various factors.”

“Before outlining the proposed strategies, they should consult with the professional bodies available in Penang, as well as with relevant housing and construction players currently practicing and working in the state.”

Lim then suggested that the local government should be included as a source to obtain information and support suggestions to formulate a practical set of strategies to become the recognised policies of the state government.

“The state government should legislate a policy to buffer the impact of rising building material costs.”

“They have left the pricing mechanism of certain raw materials to open market forces.”

“Possibly they do not accept that the housing construction sector is important, especially the affordable housing programme and policies,” he said.

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