Chong: House prices will definitely rise after GST

Sarawak DAP chief Chong Chieng Jen is certain that the prices of houses will definitely rise with the implementation of goods and services tax (GST) on April 1.

“I can assure you that the prices of houses will rise due to the prices of building materials, such as cement and steel bars, which are subject to the six percent tax,” Chong told the media.

He said he found it amusing or even strange that Sarawak Housing Minister Abang Johari Openg and his deputy Abdul Karim Hamzah have been issuing contradictory statements on the impact of the GST on the prices of housing after its implementation in April.

Chong yesterday showed a newspaper clipping dated Oct 13, 2014, to reporters, which quoted Abang Johari (left) as saying: “After the implementation of GST, house prices should fall, unless my maths is very poor.

“Prospective house buyers in Sarawak should not fall for the claims by developers that property prices would increase following the implementation of GST on April 1, saying that buyers would not be burdened by the six percent GST as developers would enjoy an input tax deduction for the building materials they used.

“They have to pay GST for the materials, of course, but at the end of the day the building process chain, developers can claim GST back on what they had purchased.

“The price of houses cannot be higher than what it is now. At the moment you are paying 10 percent government tax, plus six percent sales tax. If it imposed at six percent, then it should be lower. That’s the logic,” Abang Johari had said.

'Year-to-year prices will appreciate'

Chong who is the MP for Bandar Kuching and Kota Sentosa assemblyperson, then showed another paper clipping dated March 7 this year which quoted Abdul Karim as saying that after the implementation of GST, house prices would increase by three to four percent.

“It (price) might probably be a three to four percent increase, but then it is still subject to market forces. Year-to-year the prices will definitely appreciate,” Abdul Karim had said.

Chiding Abang Johari for his ‘poor maths’, Chong told newsmen that he agreed with Abdul Karim for the fact that a lot of building materials are not subject to sales tax, but when GST is implemented, prices of building materials, such as cement and steel bars, would be subjected to the six percent tax.

Abdul Karim was correct to say that house buyers could expect to pay more for house prices after April 1, citing a terrace house as an example.

He said that a buyer who went for a terrace house which was worth RM350,000 would be expected to pay another RM30,000 for the total cost of GST.
 
on Malaysiakini(14/3/2015)