REHDA Penang has reduced property prices by 6-10 percent. Hooray!

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Sales and Service Tax (SST) has started. There has been a few car models including BMW which has announced lower prices with the SST compared to previously. The good news are now extended to the property market. According to an article in NST,  Finance Minister Lim Guan Eng has praised the Real Estate and Housing Developers Association (REHDA) of Penang because it has reduced the prices of houses in the between 6 and 10 percent. This is in line with the government’s initiative to provide SST exemption for the construction sector, as announced previously. He said all housing developers nationwide should follow the example set by Penang REHDA and adopt the same measure. If they do this, it will enable more people to buy their own homes. He said, “This is a positive step by REHDA in the state. We hope that they can advise other members nationwide to follow in their footsteps.”

He added, “Penang REHDA has also shown that they are a socially responsible corporation as they have not taken advantage of the tax relief, and instead channeled it back to the people.” According to Penang REHDA chairman Datuk Toh Chin Leong, the prices of homes in Penang costing RM300,000 and above would be reduced by 10 per cent.For properties costing below RM300,000 the reduction will be six percent. This applies to both the existing and new projects. He said that this reduction was possible because housing developers are now able absorb the cost as they have been exempted from the SST. This, he said, was previously taxable under the previous Goods and Services Tax (GST). He added, “We also welcome the implementation of the SST because under the GST, developers had to shoulder additional costs, some of which were transferred to the consumer. But through the SST, several components of the tax related to construction have been exempted, thus enabling us to reduce the price of houses.”

Reduction in property prices is always a good news to Malaysians who has yet to buy a property. The question is always, will these first-timers be persuaded enough to buy a property? Frankly, 6-10 percent is a good reduction and I do not think SST is the only reason. The current soft market must have also provided a push as well. It’s also extremely important to objectively decide because a good property will still be a good property even if it’s priced at 10 percent higher. The wrong property, even if it’s priced between 6-10 percent lower is still a bad property yeah. Perhaps we will start to see advertisements from developers about this change? Put their current price, draw an X and put the new price instead? I guess if they are not doing this, it’s not going to be convincing enough that they have actually reduced their property prices with this SST’s implementation versus the GST earlier. Happy Penangites…

written on 11 Sept 2018

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