Real estate prices to surge in 2023, says Rehda

THE latest reports from real estate experts show that the market is set to experience a surge in prices this year due to the continued increase in the cost of construction materials.

The trend is expected to persist for the next 12 months, which will have a significant impact on the housing market.

The Real Estate and Housing Developers’ Association Malaysia (Rehda) said today that its members are likely to raise housing prices this year due to a variety of factors.

President Datuk NK Tong (picture) said the rising cost of construction materials is attributed to a combination of factors, including supply chain disruptions, increased demand for raw materials and the cost of steel and other building materials having increased dramatically in recent months, leading to higher construction costs for builders and developers.

He added that the Rehda Property Industry Survey 2H22 (second half of 2022) and Market Outlook for 2023 report had shown that 68% of developers expect higher costs to continue for more than 12 months.

“The findings involved 136 respondents (developers) and as many as 63% of developers chose to increase the sale price of real estate as the most crucial step to overcome the increase in the cost of building materials,” he said at a press conference.

According to the same report, residential launches in Malaysia have seen a range of selling prices, with certain price points being more popular among developers than others.

In particular, mid-range and high-end properties were the most commonly launched, with developers targeting different buyer segments based on their preferences and affordability.

The data showed that the most launched selling price range for residential properties in Malaysia was between RM250,000 and RM500,000, accounting for more than 39% of all residential launches in the 2H of last year.

“This range was particularly popular for mid-range properties such as two-three-storey terrace houses, apartments and condominiums, which offer spacious living areas,” he added.

On the higher end of the market, the data showed that properties priced between RM500,000 and RM700,000 were the second most popular selling price range, accounting for around 30% of all residential launches.

The majority of units sold are from Seremban, Negri Sembilan, and Johor Baru, Johor, areas.

The report also found that two-three-storey terrace houses and serviced apartments were the most sold properties in Malaysia in the past year.

“These two types of properties accounted for a significant portion of the overall property market, with their popularity driven by various factors such as affordability, location and amenities,” Tong said.

The popularity of two-three-storey terrace houses can be attributed to their affordability and suitability for families, particularly those with children.

Many two-three-storey terrace houses are located in suburban areas and offer spacious living spaces, multiple bedrooms and ample outdoor areas such as gardens and yards.

These properties also provide residents with easy access to amenities such as schools, shopping centres and recreational facilities.

On the other hand, serviced apartments have become increasingly popular among young professionals and investors looking for a more convenient and modern living experience.

Serviced apartments typically offer residents access to a range of amenities such as swimming pools, gyms and concierge services, and are often located in prime areas such as city centres or tourist hotspots.

“While the demand for two-three-storey terrace houses and serviced apartments remains high, the property market in Malaysia is still facing challenges that could impact sales and prices,” Tong said.

However, he remained optimistic about the industry’s long-term prospects and believed that the government and industry players would find innovative solutions to address these challenges.

As Malaysia’s economy struggles to recover from the impact of the Covid-19 pandemic, the number of unsold house units in the country continues to rise.

According to the same report, 61% of respondents reported having unsold residential units in Malaysia in 2H22.

The data also reveals that the bulk of the unsold units is priced at RM1 million or above (23%) attributed to several factors, including the tightening of lending policies by banks, unreleased Bumiputera lots and low demand.

“However, we hope the industry has shown signs under the unity government, whose proactive approach has helped resolve pressing issues such as the labour shortage,” Tong concluded.