Rehda president Datuk NK Tong with Rehda deputy president Datuk Ho Hon Sang and exco members at a media briefing on Thursday (March 14). (Photo by Shahrin Yahya/The Edge)

KUALA LUMPUR (March 14): The Real Estate and Housing Developers’ Association (Rehda) has found that a majority of its members faced construction challenges in the second half of 2023 (2H2023), with a little over half remarking that costlier building materials critically impacted their business operations.

In its Rehda Property Industry Survey for 2H2023 and Market Outlook for 2024 released on Thursday, the association revealed that 56% of the respondents comprising Rehda members admitted that they face construction challenges in 2H2023, as they see shortage of supply and inconsistent supply as moderate issues while low-quality products are deemed a minor issue.

The construction challenges, Rehda president Datuk NK Tong said, are an ongoing issue that has been exacerbated by the Covid-19 pandemic, and is not showing signs of going away in the near future.

"Ultimately, increase in [prices of] building materials means higher construction costs, which will end up hurting the rakyat. We hope that this issue will be addressed effectively, and that all industry players will play their roles to ensure Malaysians are not further affected by the increase,” he told reporters at a media briefing.

The respondents reported more than 10% annual increase in average price for sand and concrete as at Dec 31, 2023. Looking ahead, the respondents are expecting an average increase of 15% in construction costs in the first half of 2024, which inevitably will result in higher property prices.

Besides that, Rehda's survey also found that overall residential launches and performance in 2H2023 experienced a downward turn compared to the first half of the year, but sales performance reported a marginal increase.

The findings reported 4,627 out of 12,017 sold units were new launches in 2H2023, while the remaining 61.5% were from unsold units launched before the period under review.

Survey results also disclosed a higher number of unsold completed units in the RM300,001–RM400,000 category, which is considered to be within the affordable homes range, at 11% in 2H2023 compared to 3% in 1H2023.

"As much as this could be a sign of unaffordability among the B40 and lower M40 categories, this is also affecting developers who have taken up the cross-subsidy method to build these houses. Not only that the sales of their open market units are affected due to the higher price, but so are the sales of their affordable units that they had to cross-subsidise for," Tong said.

Stable OPR positive for property sector

Meanwhile, Tong said that a stable overnight policy rate (OPR) by Bank Negara Malaysia (BNM) is positive for the property sector as it alleviates uncertainties for property developers to operate in a stable business environment.

On top of that, the currently steady and low benchmark interest rate also contributes to a more positive homebuyers' sentiment, he said.

"Obviously it's very good for the sentiment of buyers as they pay less in terms of the interest for loans, so that is positive for the property industry and I think [it is] positive for a country that has home-ownership aspirations for the rakyat," Tong said.

BNM on March 7 announced that the OPR would remain unchanged at 3%, a level it has maintained since July 2023. Following that, economists also maintained their initial projection that the OPR will be kept intact at 3% for the rest of the year.

While the low OPR compared against the US Federal Reserve rates have been attributed to be the reason for the weaker ringgit, Tong opined that keeping the OPR unchanged is favourable for the industry in the near term.

"As far as the government is concerned, I think they have been very measured in what they did and they have been very considerate in thinking about the cost burden for the rakyat by not jacking up interest rates as aggressively as they have in the US.

"Unfortunately, they have been punished by certain quarters that claim that a weak ringgit shows a poorly run government. Actually no, a weak ringgit as a result of not jacking up interest rates so fast shows a very caring government to the people," he added.