House prices in Sabah to continue to rise with spike in logistic cost

KOTA KINABALU: The price of houses in Sabah is expected to rise with logistic costs are also getting more expensive.

Sea freight charges from China to Kota Kinabalu has increased by nearly 300 per cent on a year-to-year basis which the costs for a container from Guangzhou China to Kota Kinabalu
has increased from approximately US$800 in 2019 to US$2,200 this year.

Sabah Housing and Real Estate Developers Association (SHAREDA) president Datuk Chua Soon Ping said such condition would dampen the developers’ effort to lower the house prices.

“The increase in freight charges will further burden the already increasing cost of building materials.

“As such the construction industry will be adversely affected, and it will eventually result in a higher house price to the consumer,” Chua said in a statement.

Since the pandemic, the development and construction industry has been badly hit by the rapid
increase in cost of materials.

For example, the steel bar, a key material for high rise buildings, it has seen price jumped by 25 per cent from RM2,180 (Jan,2020) to RM2,900 (Mar,2021).

The price surge in materials and logistic are adding pressure to an industry that is already
burdened by the unexcepted costs brought on by the pandemic.

“The impact is more profound especially on developers who are building affordable housing, as
they face much higher risk as a result of the rising building cost.”

“SHAREDA and its members are constantly finding ways to make houses more affordable in
Sabah, unfortunately incidents like these are making such effort an uphill battle.”

Time to grow local manufacturing

The construction industry has been relying on imports of goods and material due to lack of option. Due to that, the developers will always be exposed to the risk of price fluctuation in the macro environment, including currency.

“The only way to reduce our exposure is to increase local manufacturing as well as to optimize the
supply chain of all construction materials, removing unnecessary middleman in the process.

“Our state government has done the right thing by banning the export of scrap iron early this
month. We hope the government will encourage the manufacturing of materials locally in order to
reduce our reliance in imported good in the long term.”


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