Property Market To Pick Up Following Abolishment Of GST
Property buyers are expected to be more open to the idea of buying real estate following the beginning of the zero-rated Goods and Services Tax (GST) next month.
Knight Frank Malaysia managing director Sarkunan Subramaniam said the zero-rated GST was a smart move that will stimulate the market.
However, he said the market may remain in a long period of uncertainty, as the abolition of GST and return to Sales and Service Tax must go through Parliament.
“With the announcement of zero-rated GST, property buyers who intend to purchase commercial properties can now make their decisions as the transaction price will now [from June 1] be cheaper, as they do not need to pay the 6% GST.
“For residential properties, as building and raw materials will not be charged 6% GST, the selling price is expected to reduce,” he said.
However, he noted that there won’t be a significant price cut in the short term as the raw material inventories purchased by developers are charged GST.
He added that it will take some time for the market to react, but if more developers offer lower prices as part of their campaigns, the competition could speed up the effect and benefit potential homebuyers.
Currently, commercial properties are standard-rated, where developers are allowed to charge buyers 6%.
However, although residential properties are exempted from GST, the tax still applies to materials and input procurement.