20 April 2017

Malaysians may need to dig deeper into their pockets to purchase a house following the government's move to impose a safeguard duty on the import of certain steel products for three years, warned the Real Estate and Property Developers’ Association (Rehda).

Rehda president Fateh Iskandar Mansor said developers might be forced to pass on the extra cost incurred to the buyers.

He argued that the safeguard duty, which aims to protect the local steel industry, was not good news for the property market as it would result in a significant increase in raw material cost.

"At the end of the day, if the contractors and developers can’t absorb the steel price increase, what happens? The increase will be passed on to consumers,” he was quoted as saying by The Edge.

“We used to pay about RM1,700 per tonne for smaller steel bars and now we are paying anything from RM2,300 to over RM2,500 per tonne," he added.

Fateh noted that the price of steel bars increased to RM2,570 per tonne as compared to an average cost of RM1,712 per tonne in Johor, RM1,847 per tonne in Selangor and Kuala Lumpur, and RM1,729 per tonne in Penang.

“Definitely this will increase the price of construction, and construction is the main cost in the gross development cost of a project,” he added.

The steel industry saw a 13.42 percent duty imposed on imported steel concrete reinforcing bars (rebar) as well as a 13.9 percent duty for steel wire rods (SWR) and deformed bar-in-coils (DBIC), which took effect from April 14.

Fateh pointed out that the price of cement had also increased to RM18.40 per bag compared to RM17.30 per bag in Selangor and Penang before this.

According to Rehda’s Property Industry Survey 2H2016, 29 percent of respondents said the main challenge in building affordable housing was the overall increase in the cost of doing business due to higher material, labour and compliance costs.

Fateh said the labour cost index had risen to 117.4 as of December 2016 from 111.1 a year ago.

“It’s very hard for developers to lower prices (of properties) if costs keep going up. Obviously, developers’ margins are being squeezed,” he added.

As such, he urged homebuyers to be more realistic with regard to choosing a preferred location for their potential homes.

“Wanting to own a house in the Kuala Lumpur city centre for less than RM500,000 is not realistic. That's why we also urge the media, National House Buyers Association and the government to help educate buyers,” he said.

According to Rehda’s inaugural housebuyers' survey, Kuala Lumpur city centre topped the most preferred location list, followed by Petaling Jaya-Damansara; Cheras and Bangsar; Puchong and Shah Alam; and Cyberjaya.

“Our respondents said the light rail transit (LRT) or mass rapid transit (MRT) and distance to a transportation hub are important considerations when it comes to buying a home.

“This is why we urge the government to allocate 40 percent to 50 percent of land near a transportation hub to build affordable homes because people who are looking to live in these homes are the ones who will use the public transportation," said Fateh.

“In Kuala Lumpur, we have KTM, LRT, MRT and monorail. But if you keep selling land near them for top prices, (developers) cannot build affordable homes. It’s great to build transportation hubs. But we also must be certain that the right target market stays near these transportation hubs,” he added.

Rehda reiterated its call for the government to review its property cooling measures to boost property sales.

Fateh said loan rejections continue to pose a problem for potential buyers.

According to Global House Price Index for the fourth quarter of 2016, house prices in Malaysia have increased in the quarter by 5.3 pe cent compared to the same period in 2015.

Source :