Construction costs fall, yet house prices riseThe Cities track continues to look into the probable causes of rising house prices. In continuation from the previous newsletter, we take a look at the relationship between house prices, locations and the main components of construction costs from 2008 to 2014.
The house price index was obtained from the National Property Information Centre (NAPIC), whereas the construction costs (building material cost index, labour cost index and machinery & equipment cost index) were taken from Construction Industry Development Board (CIDB).
For all the charts, construction costs refer to the “Residential” building category. The figures were indexed at 2008 as the base year.
- See more at:
http://krinstitute.org/KRI_Maps_-%E2%97%98...h.Og8g6vBD.dpufCities: House Prices by Types and StatesAnalysis
The primary takeaway from the indicators is that housing prices for Detached and High-Rise units experienced a higher increase compared to Semi-Detached and Terrace properties. The overall growth price from 2000 to 2013 for the housing units: Detached experienced the highest increase, which is 109.9%, followed by High-Rise 107.3%, Semi-Detached 99.1% and Terrace 87%.
On the other hand, all the housing type experienced almost similar Compound Annual Growth (CAGR). The CAGR from 2000 to 2013 for price index by house type, from highest to lowest are Detached 5.44%, High-Rise 5.35%, Semi-Detached 5.04% and the lowest is Terrace with 4.57%.
The state experiencing the highest CAGR across all house types is Sabah, with an average CAGR of 7.56%. Melaka experienced the lowest CAGR with only an average of 2.26%. According to Sabah Housing and Real Estate Developers Association (2014), Sabah’s high growth of house price is the effect of multiple factors, amongst others: price hike in land acquisition and fuel, high logistics cost from the effect of the Cabotage policy, electricity tariff hike, lack of good transportation systems and infrastructures, as well as high development costs.
The highest CAGR recorded is Detached houses in Pahang which is 8.21%, whereas the lowest is achieved by High-Rise houses in Negeri Sembilan with CAGR of 0.21%.
It is interesting to note that besides Sabah and Kuala Lumpur, the other states that experienced high growth of house prices across all property types are Pahang and Terengganu, with an average CAGR of 6.90% and 6.48% respectively.
- See more at:
http://krinstitute.org/KRI_Maps_-%E2%97%98...h.GEDvEjho.dpuf Extra cost as Donation mah..