Outcry over GST on property unnecessary

Association: Real estate prices depend on demand and supply

KUALA LUMPUR: The hullabaloo surrounding the impact of the goods and services tax (GST) on the property sector is unnecessary as it will be a one-off event and given time, the market will find its own level based on demand and supply, said four property consultants.

Association of Valuers, Property Managers, Estate Agents and Property Consultants (PEPS) president Datuk Siders Sittampalam said it was impossible for anyone to be specific about the quantum of increase in house prices as a result of GST.

"It is about 4% but it will be a one-off thing so house buyers should not be overly excited about it,” he said.

"By and large, there will be an immediate impact in the first couple of months but after that the market will find its level as a result of demand and supply,” said Siders during a press conference at the 24th National Real Estate Convention themed Real Estate in 2014: Issues, Perceptions and Review.

Siders is also property consultancy PPC International Sdn Bhd managing director.

There seems to be "a bit of confusion” with regards the GST with differing opinions with regards the quantum of increase on the different property segments, said PEPS vice president Foo Gee Jen.

He said the GST would play a part in raising prices but in the long run, it was the consumer who would decide whether he wanted to buy or not.

"If the consumer is not going to pay, the developer will have to absorb not only the GST but others costs as well. However, in the immediate three months or so after April 1, when the GST is imposed, there will be an immediate impact.”

Foo, who is also C H Williams, Talhar & Wong Sdn Bhd managing director, said he expected prices of the residential segment to increase by 4% and commercial developments by more than 6%.

A greater concern, said Foo, would be the commercial sub-segment.

A couple of weeks ago, it was reported that the Customs Department expected a 0.5% to 2% increase in house prices while the Real Estate and Housing Developers’ Association Malaysia maintained a 2.6% increase.

Organising chairman of the event Datuk Seri Mani Usilappan suggested property buyers to consider the secondary market if they want to avoid the GST element.

"About 80% of residential transactions are in the secondary market so if they do not want to pay GST, they should consider the secondary market,” Mani said.

On the overall high property prices, Mani said prices would dip if the economy did not perform, as there was strong correlation between the property market and the gross domestic product.

"Besides, the high prices are confined to the Klang Valley.

"The property markets in Ipoh and Johor Baru have been sleeping for a long time. It is only of late that prices are increasing.

"The thing is 90% of the attention is on the Klang Valley while 90% of the population are outside the Klang Valley,” said Mani.

Source – The Star Online