The property industry will continue to witness an increase in price, while developers of high-rise buildings are faced with challenges, reported The Borneo Post.
Deloitte executive director Tham Lih Jiun noted that prices generally go down once supply exceeds demand.
However, she noted that while there are a lot of property at the moment, particularly high-rise buildings, developers are having difficulty pushing them into the market.
“We see this especially in Johor and a lot of areas in Klang Valley,” said Tham during the Deloitte Taxmax Seminar 2015.
She revealed that the cost of material had increased even as most of the materials are supplied locally.
“But, because of the depreciation of the currency, there’s a chain effect. Although you say that you sourced the thing locally, but your currency has depreciated, which is part of the supply chain in producing that particular cost of material, probably, and with the GST and residential unit is exempt supply,” she said.
With this, she noted that construction cost has definitely increased. Nonetheless, the selling price will go up and down, depending on whether there is enough demand for the current supply.
“Even if developers are willing to sell at a loss, property prices will still go up,” she predicted.
Commenting on home prices, Tham expects the margin to be squeezed by developers – construction cost will go up, but the selling price will not increase much, particularly for high-rise buildings.
“For landed, maybe in certain locations because land is getting scarce every day and everyone is building high-rises,” she added.
Source : propertyguru.com.my