Prospective house buyers face forking out at least 10% more for their dream home, with developers bound to push additional costs caused by an increase in fuel prices and worker absenteeism.
The Star reported that the construction industry had been hit by a double blow, higher costs of building materials due to the RM0.20 increase in the price of RON 95 petrol and a nationwide crackdown on illegal immigrants by authorities.
The Star quoted Real Estate and Housing Developers Association of Malaysia president Datuk Seri Michael Yam Kong Choy as saying the failure of foreign workers to turn up for work was causing delays, which added to costs.He said developers had experienced this in the past when continuous raids by authorities resulted in legal migrant workers not turning up for work or delaying their return to Malaysia.
"These additional costs incurred by the developers is certain to be passed on to the customers, thus the price of houses are bound to increase. The raids on construction sites by authorities have frightened even the legal migrant workers, who are lying low until the heat is off," Yam said.
Yam said migrant workers, even those with proper documents, were intimidated by these raids.
"The shrinking supply of labour will force developers to pay workers more to meet contractual deadlines. Failure to meet these deadlines will result in financial penalties as developers are bound by the sales and purchase agreements signed," Yam added.
The Star reported that sales and purchase agreements stipulated that compensation will have to be paid by the developer to buyers if delivery of the said property is late. Contracts in the private sector also have no provisions for price adjustments.
Despite the call by Prime Minister Datuk Seri Najib Razak last week for businesses and traders not to increase their prices following the increase in petrol prices, Yam said it had affected the entire supply chain of the industry, involving more than 100 types of businesses.
Master Builders Association of Malaysia president Matthew Tee warned of a scenario similar to 2002, when the construction industry grounded to a standstill due to a shortage of workers.
He said their members were already complaining that their legal workers whose documents were being processed hadn't turned up for work.
"Our understanding is that all foreign workers will be detained unless they can prove that they have proper documentation. This can be difficult as their documents may still be with their employer or immigration pending the affixing visa of stickers by the authorities," Tee said.
In Penang, the Penang Master Builders and Building Materials Dealers Association says it expected construction costs to rise by 3 to 5%. The cost of transportation was likely to rise 10 to 20% and the prices of sand and cement by between 5 and 10%. - September 5, 2013.
~ The Malaysian Insider