Construction costs in Malaysia rise up to 15pc as diesel prices bite, says contractors group

KOTA BHARU, May 21 — The increase in diesel prices has affected the construction industry, with building material costs currently rising by between 20 and 30 per cent, said the Malaysian Housing Contractors Association (PKPM).

PKPM president Dr Muhsin Abdul Ghani said the situation has also led to construction costs rising by around 10 to 15 per cent compared with before, causing some customers to take a more cautious approach, including postponing plans to build homes.

“There are some customers who panic and hit the brakes, while others remain positive and continue with their construction projects. When prices go up, they usually do not come down again.

“Rising construction costs have also pushed up house prices by around 10 to 15 per cent compared with before. In Kelantan, houses that previously cost around RM150 to RM160 per square foot to build have now risen to between RM170 and RM180 per square foot,” he told reporters at the PKPM Home Building Expo 2026 here today.

“In Kuala Lumpur, construction costs can reach between RM250 and RM300 per square foot, leading to a drop in sales of around 30 to 50 per cent,” he said, adding there are concerns that rising costs could create opportunities for scam syndicates promoting prices well below market value to lure buyers.

“Scammers are highly skilled at convincing customers through persuasive promotions, leaving buyers easily misled by cheap housing offers that risk becoming abandoned projects,” he said.

Muhsin said the association would propose that the government grant income tax exemptions to individuals building homes, as an incentive to support the construction sector. — Bernama