The Real Estate and Housing Developers Association (Rehda) drew flak from a minister for predicting that house prices will go up following the recent cut in fuel subsidy.

But now, the Johor Malay Contractors Association also described the price hike as "unavoidable" or else contractors and developers would bleed losses.

Speaking to Sinar Harian , the association’s president Mahmood Amir said the government could maintain the fuel subsidy and avoid the chain reaction of price hikes if it dealt with corruption and was more prudent in its expenditure.

As for the increase in house prices, he said: "If we don't raise prices, contractors will have to reduce the sizes of homes to balance our costs and revenue and avoid losses."

He said that high demand for houses meant that higher prices would not cool down the market in the short run, but house buyers might find it difficult to keep up with their mortgages in the long run.

Rehda earlier said that house prices would go up by 10 percent following the fuel subsidy cuts as construction material would be more expensive.

Housing and Urban Well-being Minister Abdul Rahman Dahlan, however, said Rehda's statement was "irresponsible".

The minister said that even if there was an increase, it would not exceed five percent.