About half of Malaysian property developers nationwide surveyed in July expect to raise prices at the back of a spike in cost of building materials.
According to the Real Estate and Housing Developers' Association Malaysia (Rehda), about half of those surveyed plan to raise prices by 15 percent at launches this year.
On top of that, a whopping 65 percent of the 147 respondents expect general prices to rise up to 20 percent in the second half of 2011.
Presenting the survey results in Petaling Jaya today, Kuala Lumpur Rehda chief NK Tong ( right ) said much of the price rise is led by massive spikes in construction costs.
Leading this price hike is the cost of steel reinforcement which has gone up by 13 percent to RM2,589 per tonne compared to 2010, cement up 4 percent from RM15.64 per bag in 2010 and brick and partition, up 27 percent to 42 sen compared to 2010.
"This is experienced by 84 percent of the respondents," Tong said.
He noted that in Penang and the Klang Valley, land costs have also raised prices, with land going for as high as RM2,000 per square feet in Kuala Lumpur.
Rehda president Michael Yam added that labour costs are expected to also grow, particularly after the 6P amnesty programme.
"Much of the illegal workers which are to be made legal, work on construction sites.
"Will their wages be higher once they are legal?" Yam asked.
Beyond this, Rehda also expects the costs of compliance to rise, including waterworks for which fees are expected to go up as these are standardised nationwide.
"This does not bode very well for property developers...it places them in a difficult situation trying to contain costs to select a marketable price, and at the same time juggle the plethora of costs related to building materials, compliance and numerous contributions, among other," Yam said.
Levy, fine 'adding insult to injury'
Other factors contributing to a rise in prices include increased quotas for bumiputera lots.
Yam ( right ) said without automatic release schemes, developers are forced to hang on to unsold bumiputera units.
He said that to release these units so they can be sold to non-bumiputera buyers, developers have to pay a levy matching the bumiputera discount plus a fine.
"This is like adding insult to injury," he said lamenting that despite this, developers are still treated like as the "greedy bad guys".
He added that bumiputera lots are also hard to sell as "even bumiputera buyers don't want to buy these lots as it restricts them from re-selling to non-bumiputera".
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