Rehda Reports 13% Construction Cost Surge in 1H26

The Real Estate and Housing Developers’ Association (Rehda) Malaysia reports a 13% surge in construction costs between March and June 2026. This increase stems from volatile material prices and labor shortages affecting 181 members.

Sales performance showed a minor uptick to 5,260 units in 1H26. This represents a 3.2% increase from 5,098 units recorded in 2H25, lifting the take-up rate to 33.2%.

Cost pressures squeeze profit margins

Eighty-one percent of respondents reported higher overall business costs in the first half of 2026. Sixty-three percent faced construction challenges, driven by unstable building material prices and labor gaps.

Developers responded by reducing profit margins and negotiating contracts. Some increased selling prices or delayed planned launches to manage these financial pressures.

Financing constraints limit unit absorption

Fifty-nine percent of respondents held unsold completed residential units as of June 30, 2026. Loan rejections and high price points were the primary drivers of this inventory buildup.

Income eligibility gaps remain the top reason for loan denials. Rehda has urged the government to implement a Housing Credit Guarantee Scheme to support affordable home buyers.

Outlook for second half of 2026

Sixty-three percent of companies expect to freeze hiring between July 2026 and June 2027. However, 56% plan to expand their land banks during the same period.

The market outlook for 1H27 appears more balanced, though neutral sentiments remain dominant. Developers remain optimistic about a turnaround if geopolitical incidents are resolved by year-end.