The Malaysian housing industry might fall into a crisis situation if the trend of inflation and rising oil and food prices don’t take a reverse direction.
Real Estate & Housing Developers’ Association (Rehda) has warned that the housing and construction industry in Malaysia will be facing crisis if oil prices and inflation continue to soar, as reported by Thestar.
The association further revealed that cost of building construction rose by over 30% in recent past. The market for homes priced at RM300,000 (US$91,958) or below are likely to be the get the hardest blow. In addition, the high end condominiums prices have fallen between RM1,500 and RM2,000 (US$ 460-612) per sq ft.
The shrinking disposable income is putting pressure on home buyers, especially civil servants who were trying hard to purchase new homes, are postponing their purchase, resulting in decline of the Malaysian housing industry. The delay in home purchase is an effect of soaring oil and food prices that are taking away a good proportion of income and negatively impacting the growth of the industry.
The home developers are gearing for a soft market due to flat earnings and slow take up rate. Under current economic scenario, home developers are reconsidering their strategies for launching projects. Also, the Malaysian builders are struggling with their existing unsold stocks because of market-related factors such as housing finance crunch, unsuitable location of projects, and pricing structure of units.
According to a Research Analyst at RNCOS, “The Malaysian housing industry is heading towards a crisis as food and fuel prices are high and the country is facing credit problem. Moreover, rising cost of living in Malaysia giving headache to the property dealers as consumers are finding home buying extremely hard. In addition, the weak housing market is affecting the country’s economic growth that is already burdened by rising inflation.”
Furthermore, the home construction costs in Malaysia have been continuously rising and it will hurt the housing industry. Commenting on the present situation, Datuk F.D. Iskandar, Vice-President, Rehda, said that home developers couldn’t hold the price rise much longer. They have to pass the burden on to the consumers. The housing prices will certainly move up by the end of this year, as reported by Thestar.
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