Wednesday, June 11, 2014

GST Will Cause Increase In Property Prices

Developer predicts increase in property sales/prices and building costs, 10 June 2014

A major property developer (Mah Sing Group Bhd with remaining gross development value (GDV) and unbilled sales totalling RM33.9b) expects a rush for properties in the second half of 2013 in anticipation of the implementation of the Goods and Services Tax (GST) in 2015 and inflationary fears.

The group’s Executive Director for corporate and investment, Datuk Steven Ng Poh Seng said people buy properties as a home and as a hedge against inflation and sees a further push because of the GST. Accordingly, he expects property prices to increase in 2015 (on the implementation of the GST) by 4% (residential) and 6% (commercial) due to higher construction costs.

Overall, Ng expects house prices to increase by between 5% and 10% in 2014 and 2015 (house prices rose by 11.6% and 11.8% in 2013 and 2012 respectively). He attributes this partially due to increases in building material costs which went up by 3% in 2013 while in 2014 they have increased by 1% because of higher electricity and natural gas tariffs which ultimately get passed on to buyers.

Source: New Straits Times/The Star Online, 10 June 2014

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