Rising Trend in Construction Cost and Housing Price

Abstract

Rising house prices in major areas in Malaysia is becoming great concerns to many citizens, especially in big cities like Johor Bahru and Kuala Lumpur. Having a house is a measure of the quality of life of a person. Costs of materials and machinery are two factors that lead to high housing construction cost. This study compares the cost of materials and machinery for the past few years, identify factors that influences housing price and identify effective methods to control the price. The study was carried out by means of questionnaires. Respondents for this study are contractors, engineers, and housing developers, amongst others. A total of 70 questionnaires were distributed among the respondents and 30 questionnaires were returned. The data is analysed using Average Index method. From the study, the building materials price trend for the year 2009 and 2013, material rental rate for the year of 2009 and 2013, plus plant and equipment rental rate for the year of 2009 and 2013 were compared. Increased fuel price, increased production cost, increased import cost, high interest on loan are the main factors to increase housing price. The effective methods to control housing price are limiting purchases by foreigners and controlling material price.