New property launches in Malaysia will cost 13 percent more in the first half of this year due to higher construction costs, with terrace houses in the Klang Valley and Penang areas set to increase by as much as 50 percent due to land scarcity.
“Suffice to say, prices will be trending upwards,” Michael Yam, President of Real Estate Housing & Developers’ Association (Rehda).
He added that it would be “very challenging” to build houses for less than RM350,000 in the Klang Valley and Penang areas as land prices were already at a premium.
Rehda said that raw materiel prices are to blame, with prices of steel bars increasing 40 percent to RM2,580 per tonne. Land in Sungei Petani, Kedah might cost RM3 psf, while in Kuala Lumpur, where land supply is insufficient, land might cost about RM2,000 psf.
These factors have driven the price of a terrace house in Klang Valley to RM430,000, compared to RM290,000 nationwide.
Mr. Yam said the prices are affordable compared to last year’s “but wages need to rise” in order for developers to see quicker investment returns.