GST for new properties. Higher than 3%? Try it and see.

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While the government has announced that GST will be effective from 1st April 2015, there has also been lots of other announcements by everyone that this may not happen. Or this may happen but it will push up house prices. Some say GST will cause transactions to go down. Whatever is said is not really that important. GST will happen and the maximum percentage up is nothing more than 3%. This is based on a survey by the Real Estate Housing Developers Association of Malaysia (REHDA). Deputy Finance Minister Datuk Ahmad Maslan announced that the GST may drive prices up by one or two percent. This is based on the calculations by the Finance Ministry and the Customs Department. One very important notice. If any developer were to somehow got caught increasing their prices higher than 3%, they will be pulled to court under the Anti-Profiteering Act.

Until today, the market is still saying that the prices may go up as high as five percent. If anyone comes across this percentage up, kindly report them and do the public a service. In fact, as I mentioned before, unless the market starts to move faster, it is most likely that any increase be absorbed by the developers’ themselves. Their margin of profit still allow for this, period. Read here: Property prices up due to GST? Developers should just absorb it. In Malaysia, there’s always people who increase their prices whether or not it is justified and yet, most of the time Malaysians accept it which is a pity. Don’t believe? Look at the favourite and popular food items? It has increased extremely fast despite the fact that as more people patronise them, their overall profits go up tremendously even if the percentage may drop a little. Yeah, kill me for saying this. 🙂

According to Sarawak Housing Minister Datuk Amar Abang Johari Tun Openg, prices should actually be lower. The reason was because developers today are paying government a tax of 10 percent, plus the six percent sales tax. Since GST is only six percent, why would house prices be rising? This is the logic, he said.

Irregardless of who is right, the property prices would always depend only on demand versus supply. Higher supply is not helpful if it is not the type wanted or at the location desired. The demand is also useless if prices are way too high for them to afford. Of course as usual, everyone would be willing to pay ever MORE when it’s the project that they like, thus pushing up prices further without any other reasons. Read here: Property Prices too high? YOU might be the main reason.  GST is not going to be the main reason for anyone to decide on whether to buy or not to buy. I continue to believe that developers will react according to how potential buyers react. Room for further manoeuvrability? Both sides still has it. Just have to see who plays the next card first. Happy investing.

written on 22 Nov 2014

Next suggested article: GST and Property, nothing much, sorry.

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