The selling prices of residential properties in the country are anticipated to rise next year, given that the cost of doing business has increased by an average of 17 per cent in the first half of 2022 (1H2022).
The increasing cost of doing business will affect home prices going forward, according to Datuk NK Tong, president of the Real Estate and Housing Developers' Association Malaysia (Rehda).
"The majority of developers have offered some clues as to how much more expensive their new launches' selling prices would be. It is not a low amount," Tong told NST Property.
Rehda's Property Industry Survey 1H2022, which was released on Wednesday (Oct 12), had 150 responses. Of those, 82 per cent reported that their cash flow has been impacted by rising business costs.
The primary cost variables affecting cash flow in 1H2022 are labour expenses, compliance costs, land costs, and longer approval times.
Respondents anticipate an average 18 per cent increase in business operation in the second half of 2022 and beyond, which is expected to have an impact on home pricing.
Tong said that quicker and more transparent approvals are top priorities for developers.
"Although the Ministry of Housing has a comprehensive set of regulations, state and local governments begin to implement things differently. There could be some regulations, but they keep adding to them, raising the expense of compliance.
"Although you didn't see it as much in past years, it still exists. However, you can now see it not only from the opportunity costs incurred by the developers but also from the actual inflation that is taking place. Because CPI includes goods like fuel in its scope, it is not the measure of inflation we use.
"The lack of such subsidies elsewhere in the building industry leaves you completely exposed to rising energy costs. The majority of building materials require energy inputs. The cost of the building materials demonstrates that there has been double-digit inflation. Delaying your approvals will therefore increase that inflation rate as well," explained Tong.
According to the survey, the average percentage increase in the cost of building materials, such as metal products, was 32 per cent, aluminium was 24 per cent, glass was 23 per cent, steel was 20 per cent, timber was 19 per cent, concrete was 17 per cent, sand was 15 per cent, and cement was 13 per cent.