Property developers, industry players likely to bring house prices down

SST exemption on construction services and building materials would cut cost for developers

By SHAZNI ONG / Pic By TMR

Property prices are expected to go even lower than stipulated in the near term, as the market continues to stagnate further on top of slower demand for building materials despite the 10% Sales and Services Tax (SST) exemption.

We also appeal to the govt to assist us in cutting down the compliance cost, says Ekovest’s Lim (Pic by Hussein Shaharuddin/TMR)

SMD Group CEO Datuk Jeffery Tan is optimistic that house prices will go down further based on the overall depressed market sentiment.

“Personally, I believe that house prices will come down by virtue of the market force. Exemption of the SST for building materials alone will not bring down the overall building cost.

“During the Goods and Services Tax (GST) period, major building material such as sand, brick, cement and steel did enjoy the claimed-back input tax.

“In fact, the slow demand for building materials will in turn cause the price to go down slightly,” he told The Malaysian Reserve (TMR) yesterday.

Tan said he agreed with Sime Darby Property Bhd chairman Tan Sri Dr Zeti Akhtar Aziz’s view that property prices need to be adjusted in the immediate term to manage the imbalance of supply and demand currently faced by the property market.

She said developers and industry players have to manage the condition while it can still be controlled.

“As the property market softened, due to the oversupply and lower demand, property prices will definitely have to be adjusted, but of course according to the types of property.

“We need to manage it wisely and effectively while we can before the market collapses,” she said.

Zeti says property prices need to be adjusted in the immediate term to manage the imbalance of supply and demand (Pic by Muhd Amin Naharul/TMR)

Zeti added that property developers and industry players need to grab the window of opportunity to improve the market condition.

“We still have the window of opportunity to manage it, the market has just softened. It has not collapsed. If we do well, we will come out of it effectively,” she said.

She was responding to a statement by Finance Minister Lim Guan Eng who stressed on the 10% reduction in house prices following the exemption of the SST on construction services and building materials.

Meanwhile, Ekovest MD Tan Sri Lim Keng Cheng welcomed the exemption, saying that the company will be able to save cost and could even give back to its customers.

“Most developers don’t mind about the discount. For us, we appreciate the waiver. That will help us cut cost on the construction services and building materials.

“If the cost managed to be lowered, we might even pass the profit back to our customers by providing further discount,” he told TMR.

Lim said there is a need to reduce red tape in the housing industry.

“We also appeal to the government to assist us in cutting down the compliance cost. For instance, the government should look into expediting the process on the holding cost on the land,” he said.

According to Lim, getting a piece of land to be developed and approved could take three to four years.

If such an issue were to be addressed, this would help to cut down on the holding cost, he added.

For Hatten Group MD Datuk Colin Tan June Teng, he opined that there is a possibility for the house prices to go down.

“We should work with the government to overcome all obstacles and see how we can benefit the mass on certain reductions,” he said.