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Slowing GDP, new GST and property price up/down?

Slowing GDP growth in Malaysia for 2015 versus 2014 is real. So, are we going to get to buy cheaper properties soon? In a report, MIDF Research said that growth for Q1 2015 was expected to be between 5.0 – 5.2 percent. It may be on the higher end if we take the ‘crazy’ buying into account one month before 1st April or the implementation of Goods and Services Tax (GST). Read here: hhhhhh. For Q2, the GDP growth is likely to be even lower. It is expected to be between 3.5 to 4.0 percent. Major reason, as per every analyst report thus far is mainly due to GST.
What’s the actual effect of GST on the consumer price index (CPI) or better known as inflation? MIDF said it will add another 2.0 – 2.5 percentage point to the current CPI. If oil prices move up, then it will be higher, between 2.5 – 3.0 percentage point. Note, MIDF said that IF the consumer spending remain strong, we may have a better GDP growth. From this, you can see that no one could predict what it would be like. One thing’s for sure, every market supported by Gen-Y and millennials would be very vibrant. Perhaps they may turn the current negative sentiment into a positive one and showed GST has no bearing on how they spend. 🙂
Seriously though, I do hope that the demand would reduce and people would think twice before spending. This is because if the demand remain strong, the prices are going to go up. No retailer would want to reduce their profit margin if they do not need to and this is a business fact. However, every business would be willing to reduce their profit margin should demand suddenly fell to a point that they are uncomfortable with.
Coming back to the question of whether property prices would go down with GST? Nah, seriously, no. However, has the type of properties being offered today versus 2 years ago changed? Seriously, yes. I remember prices were pushing higher than RM600,000 2 years ago. Today even the bigger developers are talking about affordability. Yes, it is happening because the demand has gone down. It’s always funny because when demand is high, prices just have to go up because of ‘rising costs.’ Yet, when demand is slowing down, suddenly the ‘rising costs’ disappear. Hope you understand my meaning. Happy buying or waiting.
written on 10 Apr 2015
Next suggested article: 6% GST but property prices up 6.2%

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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