Tong (centre) and Ho (fourth from left) presented the survey findings to the media. From left are Teo, Ari and Adrina.
PETALING JAYA: Developers are anticipating property price increases due to rising material costs, with some developers foreseeing the rise to continue for the next 12 months.
According to the Real Estate and Housing Developers' Association (Rehda) Property Industry Survey 2H 2022 and Market Outlook 2023, 92% of the 136 respondents observed above-trend increases in material costs especially cement, steel, aluminium and bricks in 2022, and 68% expect the situation to continue for more than 12 months.
Rehda president Datuk NK Tong said that as he believes the inflationary environment is going to persist for some time, developers will have to consider increasing house prices to ensure that they have enough revenue to complete the projects and hand over the homes to buyers.
“Unfortunately, developers have no choice but to increase their selling prices, (or) lower their profit margin, but they can only do it to a limited extent, because… in anticipation of future increase, they cannot lower (the profit margin) too much so that they protect the homebuyers in the sense that they (ensure that they are) able to deliver,” said Tong.
Other measures taken by developers to counter higher material costs include using more cost-effective materials, building smaller units, changing the design to suit cost hikes, adopting industrialised building systems (IBS) and building higher-density developments.
Rehda deputy president Datuk Ho Hon Sang said that developers face further cost increase with the recent electricity surcharge of RM0.20/kWh imposed by TNB on industry users and the continual rise of gas prices worldwide.
While interest rates in many countries including Malaysia have seen upward adjustments to rein in inflation, Tong said OPR hikes in Malaysia have been moderate compared to other countries such as Australia, which has had eight increases in 2022 because of the current unity government’s concern on the impact of OPR hikes on ordinary people.
“At some point, people will have to make a decision on the right asset that will protect them from inflation in the long run. One of which will be real estate,” he said.
Citing the case of Turkey, where inflation hit 61% by November 2022, Tong observed that the inflation rate of home prices in Turkey has also risen to a similar level.
“If you have a home, you would have stood still because while things got more expensive, your home also got more expensive,” he said. “I think people will recognize that (they) also have to protect themselves with assets that will keep up with inflation.”
Assisted by Sunway University Malaysia, the sentiment survey amongst Rehda members saw improvements in both sales and launch units in 2H 2022. Respondents are also optimistic about the outlook for 2023, especially for the second half of the year.
However, more than half of the respondents anticipate their sales performance in 2023 to be 50% and below, where end financing remains among the top concerns.
To boost sales in 2023, respondents are planning to be more aggressive in digital marketing and virtual technology, assisting with the first 10% in down payment and giving special rebates.
Also present at the event were Rehda secretary general Teo Chui Ping, National Property Information Centre property inventory division deputy director Ari Adam and Rehda exco member Ra Adrina Muztaza.
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