PETALING JAYA (May 17): Property prices are expected to drop following the goods and services tax (GST) rate reduction to zero from 6% prior, with commercial properties to see an immediate drop come June, said the Real Estate and Housing Developers’ Association (Rehda) president Datuk Seri FD Iskandar.
“Construction material prices and costs should go down. But we expect big-ticket shopping to be delayed until June [when the new rate takes effect],” he told EdgeProp.my.
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“Commercial properties should have greater interest now as there is no more GST. As for residential properties, developers are already giving a lot of rebates and incentives to clear their stocks.
“GST is about 2% to 4% of our cost [for commercial properties] while it is 2.5% to 3% for residential properties. In the long run, the savings should be passed on to consumers. Hopefully, there will then be a higher number of people looking at properties,” he added.
However, he warned of profiteering in the short term and called for effective implementation and enforcement to prevent unscrupulous vendors who maintain higher prices despite the zero per cent GST.
“Ongoing construction contracts not much can be done but for future contracts, there should be a decrease in cost as materials and construction cost should go down,” he said.
He also said it remains to be seen how the new government will permanently remove the GST, if at all.
“GST is an act of Parliament so they will need to go through Parliament if they wish to repeal it? Give a waiver? We shall see,” he said.
Currently, commercial properties are standard-rated, meaning that developers are allowed to charge buyers the full 6%.
Meanwhile, residential properties are exempted, which means buyers are not charged GST, but the tax applies to materials and input procurement.