Smooth transition of house prices post-GST

MKH Bhd managing director Tan Sri Eddy Chen expects a smooth transition in terms of property pricing upon the implementation of the goods and services tax (GST) this April, as some developers are gradually pricing-in the consumption tax into their products.

“There will not be a big jump in (house) prices post-GST … there will not be a 15% jump like what some people are saying to make you buy their properties as soon as possible,” he said at the third session of the 17th Malaysia Strategic Outlook Conference 2015.

Another panelist, REI Group of Companies chief executive officer Dr Daniel Gambero, however, observed an unfair profiteering upon the introduction of consumption taxes in various countries and opined that the same might happen in Malaysia.

Daniel opined that the market would adjust to the new environment by next year.

As for the sectoral outlook, Chen expects a challenging year ahead for the sector and the subdued outlook could potentially continue into 2016.

As an example, he said crude oil prices had plunged 60% but transportation costs were still sustaining at previous levels.

There will be a competition for consumers’ money after the implementation of the GST and amid the weakening ringgit, as consumers’ purchasing power would be affected. It does not help when developers’ cost of building houses does not come down.

Chen said land prices were holding up well despite the softening market. “Land prices won’t come down soon no matter what people say about a slowdown in the market,’ he said, adding that recent transactions like Greenland Holdings Group Ltd’s acquisition of a 128-acre parcel for RM2.4bil or RM430 per sq ft in the Iskandar Malaysia region showed that land prices would not be cheap.

The transaction has set a benchmark for property prices in the southern economic zone because there had not been any deal of that quantum in that area previously. - By Ng Bei Shan (The Star)

No comments