Due to an escalating cost of raw materials and ocean freight rate, the selling price of bagged and bulk cement has increased.
The sudden increase in cement price in Sabah will force developers to increase the price of properties from 5% to 10%, said Sabah Housing and Real Estate Developers Association (SHAREDA) president Datuk Chua Soon Ping.
He said that the only cement plant in Sabah, Cement Industries (Sabah) Sdn Bhd (CIS) had increased the cement price by RM 45.00 per metric tonne (MT) starting today, increasing the price from RM297.20 per MT to RM 342.20 per MT.
Chua said the increase in cement price would bring significant impact to the developers in Sabah as cement is the main material used for ready-mixed concrete which make up to 50% of the value of a structural buildup.
“Cement also plays a vital part in finishing mortar, cement board, plastered wall, and floor rendering. It will bring multiple effects to other building materials associated with cement,” he said.
Chua said the cement price hike is on top of increased prices in other materials, including steel bars, reinforcement bars, copper wire, PVC pipes, as well as logistics costs which have all gone up by 20 to 30%.
“How (are the developers) going to keep the cost down if the building materials cost has gone up by 20% to 30%?” he questioned.
He said developers may need to absorb the cost for existing and ongoing projects as they are unable to raise their sale price due to the rules in Advertising Permit and Developer's Licence.
However, for new projects, developers may have to readjust their pricing to meet the rising cost in order to safeguard the losses.
“With the discontinued Home Ownership Campaign (HOC) next year and coupled with rising costs, we can expect the housing price would not be the same but to increase to another margin of between 5-10% range,” he said.
The escalating cost of building materials will have an adverse impact on the real estate industry, especially the affordable housing projects will face higher risk. This will definitely affect the recovery of our economy.
Chua said despite that the National Budget 2022 has allocated RM2 billion for gig workers and B40 group to secure loans through Credit Guarantee Corporation, the rising prices of materials may not help the target group to buy and own houses.
“Affordable housing is not easy for private developers if the government is only providing a subsidy.
“Notwithstanding the above, we encourage our members to develop more landed based properties to meet the high local demands,” he said.