KOTA KINABALU: The sudden increase in cement price in Sabah will force developers to increase the price of properties from 5 to 10 per cent.
The Sabah Housing and Real Estate Developers Association (Shareda) president Datuk Chua Soon Ping said the price hike was because of an escalating cost of raw materials and ocean freight rate.
He said the Cement Industries (Sabah) Sdn Bhd (CIS), the only cement plant in Sabah had also increased the cement price by RM45 per metric tonne (MT) starting today, increasing the price from RM297.20 per MT to RM342.20 per MT.
Chua said the increase in cement price would bring significant impact to the developers in Sabah as cement is the main material used for ready-mixed concrete, which makes up to 50 per cent of the value of a structural build-up.
"Cement also plays a vital part in finishing mortar, cement board, plastered wall and floor rendering. It will bring multiple effects to other building materials associated with cement," he said.
Chua said the cement price hike is on top of increased prices in other materials, including steel bars, reinforcement bars, copper wire, PVC pipes, as well as logistics costs, which have all gone up by 20 to 30 per cent.
"How (are the developers) going to keep the cost down if the building materials cost has gone up by 20 to 30 per cent?" he asked.
He said developers may need to absorb the cost for existing and ongoing projects as they cannot raise their selling prices because of the rules in advertising permits and developer's licence.
However, for new projects, developers may have to readjust their pricing to meet the rising cost to safeguard the losses.
"With the discontinued Home Ownership Campaign (HOC) next year and coupled with rising costs, we can expect housing prices will not remain the same but increase to another margin of between 5 and 10 per cent range," he said.
The escalating cost of building materials will hurt the real estate industry, especially the affordable housing projects that will face a higher risk. This will affect the recovery of Malaysia's economy.
Chua said despite the 2022 Budget allocating RM2 billion for gig workers and B40 group to secure loans through Credit Guarantee Corporation, the rising material prices may not help these target groups to buy and own houses.
"Affordable housing is not easy for private developers if the government is only providing a subsidy.
"Therefore, we encourage our members to develop more landed based properties to meet the high local demands," he said.
Meanwhile, the Sabah Builders Association (SBA) expressed concern about the shortage of construction workers after the resumption of work in October as many have either left to other places or changed jobs during the four-month lockdown period.
On the cement price hike, its president Henry Tsen appealed to the government to implement the Variation of Price (VOP) for the building materials into all government and private sector projects to assist contractors to survive during these trying times.
Currently, he said the VOP is only implemented for federal government projects under the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020 and is limited to steel, copper, water pipes and aggregates only.
He said the act should be expanded to cover all building materials for both public and private sector projects.