Chart of the day: Has the declining construction cost offset higher land prices?

Construction cost fell 5.3%.

Intense competition among developers has led to escalating land prices this year. But as construction and financing cost have retreated in recent months, can developers get a relief from the skyrocketing land costs?

According to Maybank KimEng analyst Derrick Heng, the declines especially in construction cost are not sufficient to offset costlier lands unless selling prices are raised.

"Construction costs, the second-largest, are just 5% below their peak. Their decline is much smaller than the 9.4% slide in home prices," he noted.

He furthered that while funding costs for developers have also probably declined in recent months, this would unlikely move the needle much as funding accounts for just 2-3% of project costs.