PETALING JAYA, Sept 23 — Property developers in Malaysia continue to navigate a challenging landscape marked by persistent cost pressures and economic uncertainty, even as they remain selectively focused on future project pipelines.

According to the latest survey by the Real Estate and Housing Developers’ Association (Rehda) Malaysia, 81 per cent of respondents reported an increase in the cost of doing business, with 35 per cent facing hikes of between three per cent and six per cent as a result of the West Asia war.

Construction-related challenges were also prevalent, with 63 per cent of developers citing difficulties involving building materials and labour during the first half (1H) of 2026.

This was compounded by an average 13 per cent increase in construction costs between March and June 2026, attributed to rising fuel prices and ongoing geopolitical tensions.

Rehda Malaysia president Datuk Zaini Yusoff said the findings highlighted a market that remained steady yet soft, forcing developers to operate against a difficult backdrop of rising diesel and construction material costs.

"The consistency in launch numbers and modest improvement in sales suggest that demand remains present in the market, but the survey findings clearly show that developers continue to face considerable pressure from rising costs, financing constraints and uncertainties in the wider economic environment," Zaini said.

To mitigate these pressures, developers have turned to various cost-cutting measures, including freezing recruitment, trimming employee benefits, implementing retrenchments, as well as rescheduling or scaling back planned project launches.

Looking ahead to the period between July 2026 and June 2027, the survey found that 63 per cent of respondents intend to continue freezing recruitment.

However, 56 per cent of developers indicated plans to expand their land banks during the same period, signalling continued investment in future development opportunities despite immediate operational caution.

In terms of new supply, 37 per cent of respondents plan to launch new projects in the second half (2H) of 2026, totalling 18,696 units.

The majority will be strata units, with projects in states such as Pahang, Melaka, Negeri Sembilan and Kedah primarily targeting the RM300,001 to RM500,000 price bracket.

For the 63 per cent of developers who have opted not to launch new projects, the top reasons cited were unfavourable market conditions, delays in regulatory approvals and a higher inventory of unsold stock.

Zaini stressed that addressing housing affordability requires a holistic approach that goes beyond property prices.

"Housing affordability should not be viewed solely from the perspective of property prices. Apart from access to appropriate end-financing, the cost of producing and delivering housing must also form part of the affordability equation," he said.

"Therefore, continued collaboration among the Government, financial institutions and the industry is important to ensure that Malaysians who are financially capable of owning a home can do so.

“At the same time, it is equally important for the relevant authorities to review statutory, regulatory and other compliance-related costs, particularly those which may no longer be necessary or relevant, as these ultimately add to the cost of housing delivery."

Despite these hurdles, the industry remains cautiously optimistic, with sentiment towards the domestic economy showing signs of potential improvement heading into 1H 2027.