Malaysia’s Construction Costs Rise Up To 15pc As Diesel Prices Continue To Impact Industry
KOTA BHARU: Malaysia’s construction industry is facing mounting cost pressures following the increase in diesel prices, resulting in higher building material prices and rising housing construction costs nationwide.
Persatuan Kontraktor Perumahan Malaysia (PKPM) said the diesel price hike has directly affected the construction supply chain, including transportation costs, logistics operations and the movement of raw materials.
Its president, Dr Muhsin Abdul Ghani, said building material prices have increased by between 20 and 30 per cent compared to previous levels, while overall construction costs have risen by around 10 to 15 per cent.
According to him, the situation has caused some consumers to adopt a more cautious approach before proceeding with plans to build homes.
“Some customers have started delaying their construction plans because they are concerned about rising costs.
“However, there are also those who remain optimistic and continue with their projects despite the increase in building material prices,” he told reporters during the PKPM Home Building Expo 2026 in Kota Bharu today.
He said the current price increases are unlikely to return to previous levels as operational expenses across the construction industry continue to rise.
Dr Muhsin explained that the higher costs are ultimately reflected in the prices of homes offered to buyers.
In Kelantan, for example, housing construction costs that previously ranged between RM150 and RM160 per square foot have now climbed to between RM170 and RM180 per square foot.
“When the prices of building materials and logistics costs increase, house prices will inevitably rise because developers and contractors need to absorb higher operational expenses,” he said.
He added that the situation is even more challenging in major cities such as Kuala Lumpur, where construction costs can now reach between RM250 and RM300 per square foot.
According to him, the rising prices have also affected market demand, with housing sales reportedly dropping between 30 and 50 per cent due to increased costs and ongoing pressure from the higher cost of living.
At the same time, he warned the public to be cautious of suspiciously cheap housing construction offers that appear unrealistic under current market conditions.
He said the sharp increase in industry costs could create opportunities for scam syndicates to lure consumers using prices far below prevailing market rates.
“Scammers are highly skilled at attracting customers with persuasive promotions and unusually cheap offers.
“In the end, buyers risk facing abandoned projects or suffering major financial losses,” he said.
He advised consumers to conduct thorough background checks on contractors and companies before making payments or entering into construction agreements.
Meanwhile, Persatuan Kontraktor Perumahan Malaysia is also planning to propose tax incentives for individuals building their own homes.
According to Dr Muhsin, income tax exemptions could help reduce the financial burden on the public while stimulating the construction sector, which is currently under pressure from rising operational costs.
He said such incentives could also support the long-term sustainability and growth of Malaysia’s housing construction industry amid challenging economic conditions.
