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No SST on building materials does not mean lower home prices.

Posted in Property, KL / Selangor, and Starting Property Investing

A friend rushed to complete his home purchase before GST started. He did not manage to do it in time. Here’s that earlier article: Oh dear, I missed the GST deadline to buy property  Well, the story of GST has ended. In fact, this happened when GST ended and SST yet to start. People are simply buying! Not everyone needs new cars right?  The rush to buy a car was real because within a Whatsapp group I was in, one was happy she bought a new car before SST and one was unhappy because he bought a car just before the GE14. Anyway, the point remains the same. Was the car really necessary in the first place with or without the GST.  If the answer is yes, then it’s a purchase based on needs. If the answer is no, then one has just overspent money which could have been invested. 😛

Here’s that article about how even if building materials are to be exempted from Sales and Services Tax (SST), prices of home may NOT becoming down. This is a remark from our Housing and Local Government (KPKT) Deputy Minister Raja Kamarul Bahrin Shah. His actual sentence, Cement [bricks] and steel will be exempted from SST and I was asked how many percent would the house prices come down yesterday.  But this is impossible for me to answer because although we are lowering the prices for these materials, the cost [of building homes] can be increased by the rising cost of other components, such as land prices, development charges and compliance cost.” Raja Kamarul also shared this, We also need to look at having a central database in distributing the affordable and general houses because there are still first time home buyers missing out.” Here’s that article in Edgeprop.my

I think his remarks can be said to be a fair one.  Unless all the costs are on the way down, the prices would not be trending downwards, right?  Actually, materials are just one part. The construction method is another component which can help the overall cost to drop tremendously. Instead of the usual 3 years, how about halving the time needed to build them. How about the state governments become many times more efficient than today. Why must it take months and months for approvals? All these may be just time but to the developers, time is money. If they can realise their profits in shorter periods of time, they would not need to be cost this into the final price of the home. Anyway, remember the Build Then Sell that was once touted as a game-changer.  This Build Then Sell concept can only come true when all parties work together. Homes are completed in 12 months instead of 3 years.  If a developer has to stretch his construction to three years, many would have collapsed with the Build Then Sell concept. Imagine if the time from land acquisition to construction can be within weeks? Happy understanding.

written on 14 Aug 2018

Next suggested article:  Housing loans approval rates stable, housing developers still building

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