New homes to cost 10% more

Fuel price rise and crackdown on illegals affecting construction sector

People looking to own a house any time soon will have to pay at least 10% more for their dream home, according to developers.

They said the increase was due to the double whammy that has hit the construction industry – higher costs of building materials resulting from the 20 sen rise in the price of RON95 petrol and diesel and absenteeism among foreign workers because of the nationwide crackdown on illegal immigrants.

Real Estate and Housing Developers Association of Malaysia president Datuk Seri Michael Yam Kong Choy said the failure of foreigners to turn up for work was causing delays, thus adding to costs which contractors were certain to push to consumers.

He added: “The raids on construction sites have frightened even legitimate migrant workers who are staying away.

“This also happened in past raids, Legitimate migrant workers simply did not turn up for work or delayed their return from their country until the storm blew over.

“Because of the shrinking supply of workers, developers have to pay more for labour to meet contractual deadlines, failing which they will be penalised.”

Developers are bound by the Sales and Purchase Agreement and will have to pay compensation to buyers for late delivery, Yam said, adding that contracts in the private sector were awarded with no provisions for price adjustments.

While acknowledging the need to flush out illegal immigrants, he said any reduction in the number of workers would hurt developers.

On the fuel price hike, Yam said it affected the supply chain of the construction industry, involving more than 100 types of business.

Master Builders Association of Malaysia president Matthew Tee said members were complaining that their legal workers whose documents were being processed were staying away for fear of being arrested.

“Our understanding is that all foreign workers will be detained unless they can prove that they have proper documentation,” he said.

“This can be difficult as their documents may still be with their employer or immigration pending the affixing visa of stickers by the authorities.”

He added that there had been cases in the past of legal workers being detained for up to 14 days.

Tee hoped that there would be no recurrence of such instances, and warned against a repeat of the situation in 2002 when the construction industry was brought to a standstill due to a shortage of workers.

In George Town, the Penang Master Builders and Building Materials Dealers Association says it expected construction costs to rise by 3% to 5%.

Association president Datuk Lim Kai Seng said the cost of transportation was likely to rise 10% to 20%, and the prices of sand and cement by between 5% and 10%.

He said that cement now cost RM17.50 per 50kg while sand sold for RM70 per cubic metre. - By MARTIN CARVALHO (The Star)


September 5, 2013 at 10:38 AMkenD

Michael Yam who represent the redha... increase as much as you like because you are from the other planet, your statement making no sense at all. The more you speculate the faster the market will collapse. And hopefully you don't keep the time bomb for yourselves by the time it explode or we'll see another datuk in the bankruptcy list...

September 9, 2013 at 12:25 AMPenang Fan

Developers have very creative excuses just to raise their profit margin. First the steel price then the cement price and now the illegals clamp down. I just don't buy their lame excuses.

The Government should investigate and stop these greedy business man from praying on future home owners who already can ill afford today's prices.

Beside all non Bumis' are paying too much. Bumis for are still enjoying subsidized pricing even for luxury homes. If Bumi can afford luxury homes they can pay the full price too. That should be eradicated to bring down the price for everyone.

September 9, 2013 at 12:52 AMcondomana

Michael Yam is only doing his job as the rep for the developers mah. And what he said might not be that far from the truth. We must all remember that developers don't only build homes for Penang island, where the price of properties are generally more speculative with high margins targeted at the luxury market, therefore less sensitive to material cost. But developers also build homes for outback areas like kepala batas, kulim, sungai petani etc whereby no "investor club" would be interested in, can't "fry", therefore having to sell at minimal margins. These houses will be very sensitive to material cost.

I just read one piece of news that reported what our housing minister said in response to Michael Yam's statement and I quote "To me, this is an irresponsible statement (by Michael Yam). We have our own formula and we feel that the reduction in oil subsidy by 20 sen per litre cannot be translated into a house price increase of up to 10%".

Now, if our housing minister had read Michael Yam's article carefully, he would have realized that what Michael actually said was "....due to higher costs of building materials resulting from the 20 sen rise in the price of RON95 petrol and diesel and absenteeism among foreign workers because of the nationwide crackdown on illegal immigrants."

But the title "New homes to cost 10% more" given to this report by Star reporter MARTIN CARVALHO is surely misleading people to believe that there will be 10% increase in ALL house price. Was that intentional to do their big advertisers a favour?....:)

Bottom line, when you read something, read it carefully with your brain.