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House price hike likely in M'sian state

Publication Date : 17-08-2012

 

The selling price of properties in Malaysian state of Penang will soon surge by 5 per cent-10 per cent following the recent move by Lafarge Malayan Cement to raise cement prices by about 6 per cent, according to housing developers in George Town.

Following Lafarge's announcement, a 50kg bag of cement is now priced at 17.50 ringgit (US$5.6), compared to 16.50 ringgit before the hike.

Penang Master Builders & Building Materials Dealers Association president Lim Kai Seng said 60 per cent to 80 per cent of the materials used for a building comprised cement and cement-related materials.

“This is why an increase in cement price will have a significant impact on property prices.

“The other cement manufacturers in the country have sent signals that they will raise prices very soon,” Lim said.

There are six cement producers in Malaysia, namely YTL Cement Bhd, Tasek Corp Bhd, Cement Industries of Malaysia Bhd, Lafarge, CMS Cement Sdn Bhd, and Holcim (M) Sdn Bhd.

Only Sarawak-based CMS Cement has confirmed it would keep prices at the current level.

Lim said the price of other essential building materials such as sand and aggregate had also increased.

“The price of sand is now between 40 ringgit and 43 ringgit per cu yard, depending on the grade, compared to 38 ringgit-40 ringgit earlier this year.

“The price of aggregates is now at 21 ringgit per tonne, compared to 20 ringgit per tonne earlier this year,” he said.

House prices on the island are expected to rise by 10 per cent, while in Seberang Prai, housing prices are expected rise by 5 per cent, following the hike in cement price.

Kuala Lumpur-based developers such as Mah Sing Group Bhd and SP Setia Bhd with projects in Penang will continue to absorb the cost of the cement price increase.

Ideal Property Development Sdn Bhd managing director Alex Ooi said the company was now revising the selling prices of its new projects upwards, due to the hike in cement price.

“There will be at least a 10 per cent hike in the selling price of properties on the island.

“A hike in cement price means the price of all cement-related products such as concrete and bricks will rise. Construction cost will go up by between 15 per cent and 20 per cent.

“We expect the rest of the cement manufacturers in the country to adjust the price of cement upwards in the next one to two months,” he said.

In addition to the rise in cement prices, the cost of labour and transportation charges have also increased this year.

Tambun Indah Land Bhd managing director K.S. Teh said the cost of labour had increased to 45 ringgit per day this year, compared to 35 ringgit a year ago.

Transportation charges for sand have increased to 450 ringgit per truck load this year from 400 ringgit a year ago.

“There is also a labour shortage, as many Indonesian workers have gone back to Indonesia, which is booming currently.

“The selling price of properties will be impacted by the hike in raw materials and labour costs.

“However, Tambun Indah will absorb the increase in the price of raw materials until year-end.

“We will revise our pricing next year,” he added.

Teh said the selling price of properties on the island would increase more because of the additional transportation charges to ferry the raw materials to the island.

“This is why the increase in property prices on the island will be around 10 per cent, compared to about 5 per cent in Seberang Prai,” he said.

Tambun Indah will be launching next month the Straits Garden@Jelutong on the island, the Pearl Residence@Pearl City and Pearl Indah@Pearl City projects in Simpang Ampat.

The Straits Garden is a high-rise project comprising 183 condominiums priced from 688,000 ringgit onwards, while the Pearl Residence@Pearl City and Pearl Indah@Pearl City schemes comprise landed properties priced between 353,000 ringgit and 508,000 ringgit.

Mah Sing managing director and chief executive Leong Hoy Kum said the cement price hike would have less than a 1 per cent impact on construction cost.

“Most of our projects have been tendered out and the construction costs are already locked in,” he added.

SP Setia property (north) general manager Khoo Teck Chong said the group would absorb this impact for now to be competitive.

”If other raw material prices such as bricks, rebar and tiles were to increase drastically, we may then have to review and adjust our property selling price accordingly,” Khoo added.

Meanwhile, the Malaysian Competition Commission (MyCC) chief executive officer Shila Dorai Raj had said the price hike by cement manufacturers did not at this juncture warrant a formal investigation.

“Price increases are by themselves not anti-competitive in nature. However, if there is evidence of collusion among the competitors to increase prices, this would be of concern to MyCC and may merit an investigation,” she said.

(US$1 = 3.13 ringgit)

 

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