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| Pricing in the Higher Costs? |
Will prices of real
estate go up in 2015 and thereafter?
Let us look at some
issues.
Now that the issue
of water may be settled soon with the impending water transfer from Pahang and
the building of the Langat 2 reservoir in tow, let us look at the closer-to-home issues.
Apart from water
which constitute about 45% of the woes for developers in the utilities
category, higher costs has impacted development of new projects generally.
Developers have now
cited the higher cost of doing business in the first half of 2014. The increase is 20% higher than before.
What are the
causes?
The increase cost
has been attributed to such items as higher
compliance cost, scarcity of land, higher infrastructure contribution funds and
higher conversion premium.
There were also claims that building
material steel bars, cement, bricks, sand and river sand and wages have risen
in the first six months of 2014.
The latest REHDA survey paints this
picture:
Overall, 45 percent of the
respondents are neutral of the property market in 2H 2014, while 33 percent are
pessimistic.
Moreover, 41 percent of the
respondents are pessimistic for 1H 2015.
What’s in store for 2015?
Currently, developers are holding
back new launches. Take up rates have
dropped to 49%.
Despite this, with the looming GST
imposition comes April 2014, many experts have predicted that prices will continue
to increase, not discounting the 8% rise already experienced in 1H 2014.
Thought residential properties may
be GST-exempt, higher building costs will inadvertently be passed on the buyers
via higher launch prices.
So, it does not look too good for
house and real estate buyers comes 2015.
What say you?
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