Impossible to build affordable homes below RM100,000 - Contractor

SHAH ALAM - The cost of constructing affordable housing for the B40 group, priced at RM100,000 and below, is becoming increasingly challenging due to the rising prices of building materials such as cement and steel.

Malaysian Malay Contractors Association (PKMM) President Datuk Seri Mohamed Fadzill Hassan said that the sharp increase in building material costs had contributed to an average rise in house prices of 10 to 20 per cent.

"This makes it impossible for housing developers, including government agencies, to offer houses at prices below RM100,000 to those in need. Previously, a 1,000-square-foot house could be built at a cost of around RM90,000.

"Now, the required cost has reached RM120,000 before any construction project can be completed. The increase in building material costs has made construction projects more expensive, forcing house prices to rise beyond what the B40 group can afford.

"This difficulty raises concerns about the urgent need to provide affordable housing for the B40 group while also adapting existing housing policies," he told Sinar Premium.

Even though the price index per unit of cement recorded an increase of only 0.1 to 2.1 per cent in some areas, Fadzill said it still affects the rise in house prices because building materials account for about 65 per cent of project costs.

"This causes contractors' tender prices to increase according to current prices.

"In addition, the predicted increase in petrol prices is also expected to put additional pressure on house prices, which may rise further," he said.

Cement, Steel and Diesel

He added that cement was a crucial component in house construction because almost all building materials use it as a primary component.

Therefore, he said, when the price of cement rises, house prices also increase.

"Cement is the main material for tile installation and bricklaying in stone house construction.

"The price of cement was previously only RM21 for a government-controlled item, with a rebate of RM3 or RM4. Now, no rebate is given, and price monitoring seems to no longer be conducted by the authorities," he said.

On July 11, the price index per unit of cement recorded an increase of between 0.1 per cent and 2.1 per cent in several areas in Peninsular Malaysia, Sabah, and Sarawak, according to the Statistics Department.

Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said that the highest increase was in Selangor, Kuala Lumpur, Melaka, and Negeri Sembilan (2.1 per cent), followed by Pahang (1.6 per cent) and Kuching (0.1 per cent).

Previously, the price index per unit of steel also increased between 0.1 per cent and 1.9 per cent in most areas in February 2024 compared to January 2024.

The highest increase in the price per unit of steel was recorded in Kota Kinabalu (1.9 percent), followed by Terengganu and Kelantan, and Sibu (each 0.7 percent).

Besides the increase in cement prices, Fadzill believed that the rise in diesel prices also affected house construction costs due to the increasing transportation costs.

"When diesel prices rise, the rental for machinery also increases by 20 per cent from the usual price.

"All these factors influence the overall increase in house prices and add challenges to the construction industry in offering affordable homes to the public," he said.