THE government is expecting a 20 to 30 per cent reduction in the number of low medium-cost houses built this year as developers struggle with higher development cost.

Deputy Minister of Housing and Local Government Datuk Hamzah Zainudin said the country's housing sector is showing signs of slowing down as material costs have gone up by almost 30 per cent.

"I feel that the number of properties will reduce substantially this year especially in the low medium- and low-cost sector," he told reporters after launching Raine, Horne and Zaki Property Management Sdn Bhd's 24 hour customer care centre in Kuala Lumpur yesterday.

The care centre, the first of its kind in Malaysia, is a 24-hour call and emergency assistance for residential property owners.

Hamzah said amid the current soaring prices, the government is unlikely to meet its target to build 50,000 to 80,000 low medium-cost houses this year.

He said "quite a number" of private developers have indicated to the government that they are unable to sell such houses at a fixed price of RM42,000 each.

The ministry is keeping the ceiling price of low medium-cost houses at RM42,000 each but is studying to see if the price can be increased.

"The Minister of Housing and Local Government will make an announcement very soon," he added.

To date, Hamzah said, only 20,000 to 30,000 of the low medium-cost houses are in progress.

On fears of stalled or abandoned housing projects, he advised developers that have just started or are within six months into a project to re-look at their cash flow and to launch projects by phases.