Builders seek higher price for cheap units
28/03/2007 The Star By Nik Khusairi Ibrahim

PENANG: Developers here want the price of low-cost and low me-dium-cost housing units to be in-creased in view of rising cost of building materials.

Real Estate and Housing Developers’ Association (Rehda) Penang branch chairman Datuk Jerry Chan Fook Sing described the current prices as ‘unrealistically low’ and urged the state government to review them.

The branch has proposed that the price for a low-cost unit be increased from RM45,000 to RM55,000 and a low medium-cost unit from RM75,000 to RM90,000 in the state.

Chan said the price of a low-cost unit was last revised in 1998 and that of a low medium-cost unit in 2002.

He added that the price of construction materials had increased between 40% and 70% in recent years, adding that escalating land price had further pushed up costs.

“The price of steel has increased by more than 70% and this has a direct impact on the cost of construction of low and low medium houses,” he said.

He said the steel price in the domestic market was now RM500 per tonne higher than the ceiling price of RM1,600 and urged the government to explain why action was not being taken against the dealers.

“Even in Singapore, the price of steel is lower, at about RM1,800 per tonne, compared with RM2,100 per tonne sold in peninsula,” he said.

He added that the steel shortage was because a large portion was allocated for the export market.

“Manufacturers are diverting their output to the export market, especially to Middle East countries where billets fetch higher prices than the controlled price of steel bars,” he told a press conference yesterday.

He said building contractors had to bear the brunt of the fluctuating prices as they had to deliver according to specification stipulated in the contracts.

The association urged the Ministry of International Trade and Industry to find ways to keep the price of steel, copper, sand, plywood and other raw materials at an affordable rate.

He also said that the extension of the defect liability period for houses from 18 months to 24 months would further add to the financial burden of the developers.