Property prices continue to rise as challenges persist

KUALA LUMPUR: The property industry will continue to see prices continue on an upward trend, with Deloitte noting that developers of high rise buildings are currently facing challenges.

According to executive director Tham Lih Jiun, generally if supply exceeds demand, prices will go down.

However, she noted that at the moment, a lot of property especially high rise building, developers are facing challenges to push this building into the market.

“We see this especilly in Johor and a lot of areas in Klang Valley,” she said during the Deloitte Taxmax Seminar 2015.

On the cost in terms of this industry, Tham noted that as far as she knows, cost of material has gone up although a lot of material is supplied locally.

“But, because of the depreciation in 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.

As such, she observed that cost of construction has definitely been increased but whether the selling price will go up and down, it still comes down to demand and supply, whether the demand is enough to cater for the supply that we are currently having.

“Even if developers are willing to sell at a loss, property prices will still go up,” she predicted.

On housing prices, Tham believes the margin will be squeezed by developers, cost of construction will go up but the selling price will not be able to go very high especially for those high rise buildings.

“For landed, maybe in certain locations because land is getting scarce everyday and everybody is building high rises,” she added.