GST pushing cost, home prices up, say peninsular developers

According to results of a survey, peninsular developers say implementation of GST has caused their business cost to increase. ― File pic
According to results of a survey, peninsular developers say implementation of GST has caused their business cost to increase. ― File pic

PETALING JAYA, Sept 11 ― Almost all developers in Peninsular Malaysia said the implementation of the Goods and Services Tax (GST) has caused their business cost to increase, according to the results of a recent survey released today.

According to the Real Estate and Housing Developers’ Association Malaysia (Rehda) property Industry Survey for this year’s first half, 94 per cent said cost has gone up, with 45 out of 125 respondents saying cost rose by more than 5 per cent after its implementation.

Similarly, two-thirds of those surveyed said GST has increased the price of property, with 22 of them saying price has increased by more than 5 per cent.

Despite that, two-thirds of respondents also said that they have absorbed the hike instead of passing it to house buyers, with 13 per cent saying they bore 100 per cent of the increase rising from GST.

“Everybody says that developers are more interested in making money, profit-oriented. First of all, yes we have to make some profit, but our profit has actually decreased,” said Rehda president Datuk Seri Fateh Iskandar Mohamed Mansor.

“It’s not that easy. People keep pushing the blame, we are seen as black sheep for everything that is happening in the country.”

The respondents said that cost has risen by up to 11 per cent from the previous half, while 81 per cent said the rise of business cost has severely affected their businesses.

Fateh said the weakening of ringgit has especially increased price of imported material such as steel, and other essential components such as elevators, escalators and air-conditioning.

This comes sales performance dropped from the same period last year to just 40 per cent of units launched being sold.

Despite that, over 9,000 more units of houses are expected to be launched in the second half of this year.

In Kuala Lumpur, most of the launches happening in the next half will be priced between RM1million and RM2 million, up from between RM500,000 and RM1 million in the current half.

Another outlier is Kelantan, where more projects slated for the next half will be between RM200,000 and RM500,000, up from below RM200,000 previously, due to greater acceptance of condominium units in its capital Kota Baru.

Rehda’s survey was conducted between January and June this year between 125 developers in Peninsular Malaysia, down from 132 previously.

Malaysia’s GST rate of 6 per cent was rolled out on April 1 this year.