What is the estimated impact of rising material costs on construction expenses?

Question

Accepted Answer

Rising Material Costs Have Increased Construction Expenses by 13 to 20 Per Cent

The cost of construction has seen an estimated increase of between 13 and 20 per cent due to escalating prices of building materials. This surge is primarily driven by significant price hikes in key commodities such as steel and sand, alongside other contributing factors like foreign worker shortages and increased logistics costs.
Significant Price Increases in Key Building Materials

Since October 2020, the price of steel, a fundamental component in construction, has risen by approximately 40 per cent. Concurrently, the cost of sand has also experienced a substantial increase of 20 per cent within the same period. These individual price escalations contribute directly to the overall rise in construction expenses.
Broader Factors Contributing to Cost Hikes

Beyond steel and sand, several other factors are identified as major contributors to the rising costs within the building materials supply chain. These include an acute shortage of foreign workers, which impacts project timelines and labour availability, as well as increased logistics costs and an upward trend in crude oil and energy prices.
Industry Calls for Government Intervention and Monitoring

In response to these escalating costs, the Real Estate and Housing Developers’ Association Malaysia (Rehda) and six other industry bodies have urged the government to implement continuous monitoring and enforcement. Their objective is to identify and curb profiteering and anti-competition activities within the building materials sector. The industry players also propose expediting the entry of foreign workers to alleviate current shortages.
Potential Consequences for Developers and Buyers

The prevailing cost pressures are significantly impacting companies' profit margins, with the potential for loss-making projects and cash flow crises if not addressed. Developers may be compelled to pass on these additional costs to house buyers, while contractors unable to absorb the increased expenses might face the necessity of halting work. This situation could adversely affect the property and construction sector and potentially impact Malaysia's overall economic growth.

Reading history

Hide →

This history is cleared when the page is closed.

What is the estimated impact of rising material costs on construction expenses?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends