PETALING JAYA: Housing prices are expected to rise by at least 5% next year when the goods and services tax (GST) takes effect in April next year, said property experts.
“I think at best, prices will be maintained, but it is hard to get statistics because of deferred launches. Smaller units are flying off the shelves. Next year, depending on people’s grasp of the GST, prices may rise by around 5%,” said Real Estate and Housing Developers Association (Rehda) president Datuk Seri Michael Yam.
“I think some property players in hotspots will try to push the envelope further. For instance, if it’s Mont’Kiara and they have the last parcels there, if they want to push for higher prices and can hold on to the land, they will,” he added.
Meanwhile, Sunway Bhd property development division joint managing director Ong Pang Yen said that while residential properties are exempted from the 6% GST rate, the input cost is still payable but it cannot be collected directly from buyers.
“Because of that, we must transfer the cost to purchasers, but it will still be at around 4%. However, it’s still better than commercial properties which will be taxed the full 6%,” he said.
Master Builders Association Malaysia (MBAM) immediate past president Kwan Foh Kwai said from the construction sector’s point of view, the price will increase by slightly over 5%.
“It depends on how you look at component cost... there is GST and also other factors. There must be a balance... because in construction, we don’t have import cost, only inflationary pressure and foreign labour cost,” said Kwan, who is also managing director of Sunway’s construction division.
“If the government truly listens, we need foreign labour. Malaysians are not going to do such work. So how to improve supply and demand? We bring in untrained people, train them over a few years then they go home or to other countries, and that cost is then passed down to you [end-buyers],” he said.
He also explained that the cost of materials such as cement and sand have been rising, citing the Building Works Composite Tender Price Index international construction consultancy Langdon & Seah Sdn Bhd growing at a compounded annual growth rate of 4% to 170.3 in 2013 from 100 in 2000.
Cement prices have seen major increases in since the market was liberalised, while sand is a scarce commodity especially with states like Selangor controlling supply.
Yam, Ong and Kwan were panelists at a discussion titled ‘Homes to cost less – is it possible?’ at The Edge Investment Forum on Real Estate 2014 here on Saturday, April 19.
The forum was themed 'Buy, Sell or Hold?' and featured three speakers who covered various topics, including where and how to invest, the prospects of investing in London and a panel discussion on whether home prices will become more affordable. The Edge managing director Au Foong Yee moderated the panel discussion.
The forum, organised by The Edge Malaysia, was sponsored by Hong Leong Bank and supported by Sunway Bhd.
For the full coverage of The Edge Investment Forum on Real Estate 2014, read the coming April 28 issue of City & Country, the property pullout of The Edge weekly.
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