Price hikes in construction material a challenge for affordable housing

If the government did not control the rise in building material prices, affordable housing would become increasingly difficult to obtain.

NURUL NABILA AHMAD HALIMY
NURUL NABILA AHMAD HALIMY
02 Aug 2024 12:30pm
The increase in cement and steel prices is expected to raise house prices by five to ten per cent, depending on their direct impact on overall construction costs. (Inset: Arifuddin)
The increase in cement and steel prices is expected to raise house prices by five to ten per cent, depending on their direct impact on overall construction costs. (Inset: Arifuddin)

SHAH ALAM - The increase in cement and steel prices is expected to raise house prices by five to ten per cent, depending on how much the increased cost of materials affects the overall construction costs.

In other words, if the government did not control the rise in building material prices, affordable housing would become increasingly difficult to obtain.

Bumiputera Infrastructure Contractors and Facility Management Association President, Datuk Seri Dr Arifuddin Mohamed Shah believed that the increase in cement and steel prices would have a chain reaction in the construction industry, raising project costs and ultimately affecting the selling price of houses.

"The increase in cement and steel prices also impacts homebuyers' affordability and the stability of the property market.

"For example, a rise in cement prices can lead property developers to pass on these additional costs to the selling price of houses, making new homes more expensive for buyers, with prices increasing by five to ten per cent," he told Sinar Premium.

Arifuddin said that high-rise buildings such as apartments and condominiums usually experience more significant price increases.

"High-rise housing and terrace house projects require more cement and steel than other types of houses. Therefore, any increase in the prices of these materials will have a greater impact on the overall construction costs.

"Additionally, these projects also involve higher structural costs and will be directly affected by the rise in building material prices," he said.

He added that factors contributing to the increase in cement and steel prices include rising raw material costs, disruptions in the global supply chain, ongoing inflation and high demand from the construction sector.

"Fluctuating exchange rates also influence the cost of imported materials. The expected increase in steel prices may continue if these issues are not resolved.

"So far, neither the local nor the global economy shows signs of strong recovery," he said.

Arifuddin believed that even though the price increase per steel unit might not reach two per cent, the implications were still significant for the overall construction project costs.

"Contractors may need to raise their service prices, which in turn increases construction costs. This can lead to higher house selling prices as property developers pass on these additional costs to buyers.

"It may also make the property market less affordable for a large portion of the population," he said.

Arifuddin, who is also a member of the Advisory Board of the Malaysian Construction Research Institute (CREAM) said that those most affected by the increase in steel prices were contractors, property developers and homebuyers as the end users.

"Contractors have to bear the higher material costs, reducing their profit margins or forcing them to increase service prices. Property developers may have to raise house selling prices to cover the increased construction costs.

"Homebuyers, as the end consumers, will face high house prices, which could affect their ability to purchase a home," he said.

-- INFO

Based on quotes from suppliers, excluding markup prices by contractors for profit.

- Ready-mixed concrete G10 (1 cubic meter): RM227 (Previously RM190)

- Cement (1 bag 50kg): RM22.50 (RM18)

- Steel T10 (1 tonne): RM3,170 (RM2,600)

- Plywood 12mm (per sheet): RM46 (RM38)

- Fine sand (1 large lorry): RM990 (RM800)

- Coarse sand (1 large lorry): RM814 (RM670)

- Red brick (per piece): 47 cents (38 cents)

- Sand brick (per piece): 26 cents (21 cents)

- Paint (20 litres): RM175 (RM143)

- Tiles (per piece): RM1.80 (RM1.50)