A Preliminary Review of Housing Development Economics in Sarawak: Demystifying the Development Cost Components and Transaction Costs

Abstract

Shelter is primarily characterized as a housing necessity, which is an essential component of Maslow's Hierarchy of Human Needs.  Housing development levels have been suggested as a metric for a country's socioeconomic stability. Despite its significance for human well-being, there appears to be a problem with home affordability. This scenario is convinced to derive from the mismatch between market affordability and housing selling prices, especially in Malaysia. Residential Transaction Data reported by NAPIC in Q1 2024, 53.1% of consumers demand residential prices ranging below RM300,000.  However, the average house prices recorded in Sarawak for Q4 2024 are RM415,936, with Sibu recording the highest house prices, followed by Miri and Kuching, respectively. Consequently, houses sold in Sarawak are categorized as severely unaffordable. Hence, this calls for research to debunk the total development costs for housing development in Sarawak, namely the land, hard, and soft costs. By doing so, it will reveal the composition of the cost components of housing development costs in Sarawak as well as the corresponding transaction costs. This will determine which housing development cost components with the highest costs within the three main components (land, hard and soft cost). The findings will be correlated with the costs of housing development in Peninsular Malaysia. By assessing the similarities and differences between Sarawak's and Peninsular Malaysia’s cost components distribution, it will lead to producing evidence-based insights that are both diagnostic and prescriptive, derived from all the data gathered. Such information is crucial for assisting policymakers and regulatory bodies in assessing the impacts of the regulatory framework monetarily.