Understanding the relationship between construction costs and selling prices with specific reference to housing projects in the Klang Valley
Debates on the continuous and upward increase in the selling price of houses continue unabated. However, very little has been said about construction costs of houses, such as, is the trend in construction costs of houses moving in similar patterns too? One way to understand it is through comparing a...
| Main Authors: | , |
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| Format: | Proceeding Paper |
| Language: | English English English English English |
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International Business Information Management Association, IBIMA
2015
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| Online Access: | http://irep.iium.edu.my/49523/ http://irep.iium.edu.my/49523/1/Letter_IRERS_Scopus.pdf http://irep.iium.edu.my/49523/4/Accepted-Papers-until-25.2.2014.pdf http://irep.iium.edu.my/49523/7/IRERS2014_Khairuddin_sharina_rev.pdf http://irep.iium.edu.my/49523/10/49523_IRERS_2014_Khairuddin_sharina.pdf http://irep.iium.edu.my/49523/13/49523_understanding%20the%20relationship_scopus.pdf |
| _version_ | 1848783470758723584 |
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| author | Abdul Rashid, Khairuddin Hasan, Sharina Farihah |
| author_facet | Abdul Rashid, Khairuddin Hasan, Sharina Farihah |
| author_sort | Abdul Rashid, Khairuddin |
| building | IIUM Repository |
| collection | Online Access |
| description | Debates on the continuous and upward increase in the selling price of houses continue unabated. However, very little has been said about construction costs of houses, such as, is the trend in construction costs of houses moving in similar patterns too? One way to understand it is through comparing and contrasting the construction costs index against the selling price index of housing projects. This paper reports on a study into historic cost and price movements of newly built housing in the Klang Valley. The study endeavors to seek answers to the following key questions: (i) is the construction costs of houses moves in similar pattern with the movement of house prices; and (ii) is construction costs of houses moves in similar pattern with the movement in the economy? The methodology for the study starts with the identification of appropriate indices for both construction costs and selling prices of houses in the Klang Valley. While there is house price index published by NAPIC but there is no published data on construction costs price index of houses. In addition, the NAPIC house price index does not differentiate between the selling prices of new or second-hand houses. Consequently, the study constructed its own construction costs and house price indices for new houses. Data on construction costs of houses (all types), was acquired via a questionnaire survey among quantity surveyors and contractors. In the case of selling prices of houses, data was acquired from newspaper archives and websites with records on advertisements for new houses. The period covered in the study is for the duration from 2005 to 2013. The constructed indices were validated via discussions with experts representing the Malaysian housing sector and academics. The outcome of the study, in terms of the relationship between construction costs and selling prices of houses, the indices suggested that construction costs moves upwards along similar pattern with that of the selling prices but the upward movement in costs is relatively much higher than that of prices. In addition, in terms of the relationship between construction costs of houses and the economy (GDP) the indices suggested that construction costs moves upwards along similar pattern with that of the economy but the upward movement in costs is relatively higher than that of the economy. Furthermore, the indices suggested that selling prices of houses moves in tandem with the economy. The paper concludes that there is positive relationship in terms of upward movements between construction costs, selling prices and the economy during periods of economic growth. |
| first_indexed | 2025-11-14T16:21:52Z |
| format | Proceeding Paper |
| id | iium-49523 |
| institution | International Islamic University Malaysia |
| institution_category | Local University |
| language | English English English English English |
| last_indexed | 2025-11-14T16:21:52Z |
| publishDate | 2015 |
| publisher | International Business Information Management Association, IBIMA |
| recordtype | eprints |
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| spelling | iium-495232017-09-19T04:32:52Z http://irep.iium.edu.my/49523/ Understanding the relationship between construction costs and selling prices with specific reference to housing projects in the Klang Valley Abdul Rashid, Khairuddin Hasan, Sharina Farihah H Social Sciences (General) T Technology (General) TH Building construction Debates on the continuous and upward increase in the selling price of houses continue unabated. However, very little has been said about construction costs of houses, such as, is the trend in construction costs of houses moving in similar patterns too? One way to understand it is through comparing and contrasting the construction costs index against the selling price index of housing projects. This paper reports on a study into historic cost and price movements of newly built housing in the Klang Valley. The study endeavors to seek answers to the following key questions: (i) is the construction costs of houses moves in similar pattern with the movement of house prices; and (ii) is construction costs of houses moves in similar pattern with the movement in the economy? The methodology for the study starts with the identification of appropriate indices for both construction costs and selling prices of houses in the Klang Valley. While there is house price index published by NAPIC but there is no published data on construction costs price index of houses. In addition, the NAPIC house price index does not differentiate between the selling prices of new or second-hand houses. Consequently, the study constructed its own construction costs and house price indices for new houses. Data on construction costs of houses (all types), was acquired via a questionnaire survey among quantity surveyors and contractors. In the case of selling prices of houses, data was acquired from newspaper archives and websites with records on advertisements for new houses. The period covered in the study is for the duration from 2005 to 2013. The constructed indices were validated via discussions with experts representing the Malaysian housing sector and academics. The outcome of the study, in terms of the relationship between construction costs and selling prices of houses, the indices suggested that construction costs moves upwards along similar pattern with that of the selling prices but the upward movement in costs is relatively much higher than that of prices. In addition, in terms of the relationship between construction costs of houses and the economy (GDP) the indices suggested that construction costs moves upwards along similar pattern with that of the economy but the upward movement in costs is relatively higher than that of the economy. Furthermore, the indices suggested that selling prices of houses moves in tandem with the economy. The paper concludes that there is positive relationship in terms of upward movements between construction costs, selling prices and the economy during periods of economic growth. International Business Information Management Association, IBIMA 2015 Proceeding Paper PeerReviewed application/pdf en http://irep.iium.edu.my/49523/1/Letter_IRERS_Scopus.pdf application/pdf en http://irep.iium.edu.my/49523/4/Accepted-Papers-until-25.2.2014.pdf application/pdf en http://irep.iium.edu.my/49523/7/IRERS2014_Khairuddin_sharina_rev.pdf application/pdf en http://irep.iium.edu.my/49523/10/49523_IRERS_2014_Khairuddin_sharina.pdf application/pdf en http://irep.iium.edu.my/49523/13/49523_understanding%20the%20relationship_scopus.pdf Abdul Rashid, Khairuddin and Hasan, Sharina Farihah (2015) Understanding the relationship between construction costs and selling prices with specific reference to housing projects in the Klang Valley. In: International Real Estate Research Symposium 2014, 29-30 April 2014, Bangi. http://www.scopus.com/authid/detail.uri?authorId=56957712500 |
| spellingShingle | H Social Sciences (General) T Technology (General) TH Building construction Abdul Rashid, Khairuddin Hasan, Sharina Farihah Understanding the relationship between construction costs and selling prices with specific reference to housing projects in the Klang Valley |
| title | Understanding the relationship between construction costs and selling prices with specific reference to housing projects in the Klang Valley |
| title_full | Understanding the relationship between construction costs and selling prices with specific reference to housing projects in the Klang Valley |
| title_fullStr | Understanding the relationship between construction costs and selling prices with specific reference to housing projects in the Klang Valley |
| title_full_unstemmed | Understanding the relationship between construction costs and selling prices with specific reference to housing projects in the Klang Valley |
| title_short | Understanding the relationship between construction costs and selling prices with specific reference to housing projects in the Klang Valley |
| title_sort | understanding the relationship between construction costs and selling prices with specific reference to housing projects in the klang valley |
| topic | H Social Sciences (General) T Technology (General) TH Building construction |
| url | http://irep.iium.edu.my/49523/ http://irep.iium.edu.my/49523/ http://irep.iium.edu.my/49523/1/Letter_IRERS_Scopus.pdf http://irep.iium.edu.my/49523/4/Accepted-Papers-until-25.2.2014.pdf http://irep.iium.edu.my/49523/7/IRERS2014_Khairuddin_sharina_rev.pdf http://irep.iium.edu.my/49523/10/49523_IRERS_2014_Khairuddin_sharina.pdf http://irep.iium.edu.my/49523/13/49523_understanding%20the%20relationship_scopus.pdf |