Kuala Lumpur: Government intervention may be necessary to ease the cost pressure on the property development industry to ensure that house prices remain stable, said the Real Estate and Housing Developers Association (REHDA) Institute.Chairman Datuk Jeffrey Ng Tiong Lip said the rise in costs of building materials, labour and unplanned stop-work measures due to Covid-19 in the past year had affected project cash flow planning in 2021.
“The increase in material costs directly impacts the cost of doing business. This has resulted in a 13 per cent to 20 per cent hike in construction costs. For instance, the price of mild steel has gone up by 41 per cent and sand by up to 20 per cent since October 2020.
“These factors have cumulatively distorted construction cost,” he said during the opening speech at REHDA Institute’s CEO Series 2022 - Annual Property Developers’ conference here.
Ng said property development is already mired in a cost-push inflation situation and further cost increases cannot be absorbed by the market.
“A lacklustre market dictates no further room for price increases. At the same time, margins are already squeezed and continues to be eroded,” he added.
Higher financing for younger Malaysians who may otherwise not be able to save enough for down payments will help them to access the housing market, he said.
The other option is “to lower the initial acquisition costs” by directly using the Employees Provident Fund (EPF) Account Two to pay for the down payment.
“Note, however, (that) for new houses in the primary market, this may require additional provisions in the standard Sale and Purchase Agreements (SPA),” he said, adding the other ways to lower the initial acquisition cost included stamp duty waivers for the SPA, transfers and loan-related instruments.
Ng said the Malaysia My Second Home (MM2H) scheme should be strengthened and expanded to create demand. –
