Homebuyers face mounting risks as global instability threatens to push construction material costs up by between 30 per cent and 40 per cent, exposing structural weaknesses in the housing ecosystem, according to Khazanah Research Institute (KRI).<\/p>\n
KRI researcher Muhammad Nazhan Kamaruzuki said escalating geopolitical tensions, including conflicts in the Middle East, are expected to intensify cost pressures across the local construction sector.<\/p>\n
While rising costs are often seen as a challenge for developers and contractors, in reality, homebuyers bear the greatest risk in such situations, he said.<\/p>\n
“In reality, homebuyers carry the biggest risk, especially those buying homes that are still under construction. This issue is not just about construction risk but a systemic failure within the housing ecosystem,” he said in a recent KRI report.<\/p>\n
He noted that global uncertainty is already feeding through to project delays, rising development costs and uncertainty over delivery timelines, particularly under Malaysia’s progressive payment model for off-plan properties.<\/p>\n
“When cost shocks or supply disruptions occur, buyers are in a weak position because they have already made financial commitments without strong guarantees that the project will be completed,” he said.<\/p>\n
Market analysts echoed these concerns, warning that sustained cost inflation is likely to compress developers’ margins and heighten execution risks across the property sector.<\/p>\n
They said persistent volatility in key construction inputs like steel, cement and energy could force developers to either absorb higher costs or delay projects, with both scenarios ultimately affecting buyers.<\/p>\n
Contractors, they added, are also likely to face tighter margins and potential cash flow strain, especially for fixed-price contracts signed before the recent surge in input costs.<\/p>\n
Muhammad Nazhan stressed the need to reassess existing policy and regulatory frameworks to ensure comprehensive protection for homebuyers.<\/p>\n
He called for stronger project monitoring mechanisms, greater developer accountability, and improvements to sale and purchase agreements, alongside a review of financing structures and project implementation to reduce risk transfer to consumers.<\/p>\n
“Systemic reforms are needed to ensure the housing ecosystem is more resilient in facing global uncertainties, while also protecting buyers’ interests,” he said.<\/p>\n
He warned that without comprehensive improvements, any future economic or geopolitical shocks could continue to negatively impact the domestic housing market.<\/p>\n
“Homebuyers are always exposed to construction risks and financial burdens when purchasing housing projects that are still under construction.<\/p>\n
“These risks will become more pronounced as the construction sector is expected to face rising material costs amid global instability, which could slow the national economy.<\/p>\n
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