Increase in building material cost expected to drive up prices of new houses

A file photo of a construction site in Kuching.

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KUCHING, March 10: The increase in the Building Materials Cost Index (BCI) with and without steel bar for all building categories will most likely drive up prices of new houses to be launched and constructed in Sarawak and Malaysia in general. 

Sim Swee Yong Development and Construction Sdn Bhd director Dato Sim Kiang Chiok thus viewed that now is a good time to buy houses that are completed or nearing completion, more so with the present low bank interest rate. 

“Developers, however, will not be able to raise the selling price of houses that have been sold or committed,” he said in a statement today. 

Sim, who is also Sarawak Housing and Real Estate Developers’ Association (Sheda) Kuching chairman, highlighted this following a Department of Statistics Malaysia (DOSM) report that the BCI with and without steel bar for February has recorded an increase between 0.3 and 5.2 per cent for the entire building category in Sarawak. 

He explained that the increase in BCI shows that the cost of components for construction is rising and will in turn affect the cost of building houses. 

“The BCI report for February 2022 showed an increasing trend for construction cost due to steel bars and other materials such as aluminium, copper, zinc and so on. 

“The Russia-Ukraine war will also affect prices of commodities to surge together with oil and gas that will have a knock-on effect on the construction cost in Sarawak and Malaysia,” he added. 

Sim elaborated that the pricing of houses are determined by several cost components namely construction, land, compliance, capital interest, utilities connection, overhead, marketing, legal, consultant and other provisions. 

“The selling price might be raised if the developers do not wish to absorb the increase in cost. There will be limitations on how much to raise, as it would affect affordability of houses,” he added.

With the increasing construction cost set to further increase pricing of new houses, Sim said banks and valuers will have to take into account this increase so that the end financing with right loan margin can still be given to house buyers. — DayakDaily