Will GST implementation cause a temporary rise in Malaysian house prices?

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GST Implementation Expected to Cause a Temporary Increase in Malaysian House Prices

Any rise in Malaysian house prices following the implementation of the Goods and Services Tax (GST) in April next year is anticipated to be temporary. Several measures are being put in place to mitigate and control any potential price escalations. These include adjustments to real property gains tax and specific regulations for foreign property ownership.
Measures to Counteract Price Increases

The government is implementing a series of measures to manage the impact of GST on house prices. Among these is an increase in the real property gains tax, raising it from 15% to 30%. Additionally, the minimum price threshold for houses purchased by foreigners will be enhanced from RM500,000 to RM1 million. Developers will also be restricted from undertaking projects that rely on the Developer Interest Bearing Scheme.
Projected Impact on House Prices

While the Minister of Urban Wellbeing, Housing and Local Government, Datuk Abdul Rahman Dahlan, previously indicated a potential 3% increase in house prices based on a study by the Real Estate Housing Developers Association of Malaysia (REDHA), Deputy Finance Minister Datuk Ahmad Maslan offered a more conservative estimate. Maslan suggested that the actual increase might be closer to 1% to 2%, based on calculations conducted by the Finance Ministry and the Customs Department.
Rationale for Temporary Nature of Price Hikes

The assertion that any price increase will be temporary stems from the proactive measures being introduced to stabilise the property market. By adjusting taxes on property gains and setting new criteria for foreign investment, the government aims to absorb the initial shock of the GST implementation. The barring of the Developer Interest Bearing Scheme also seeks to prevent developers from passing on additional costs to buyers in a way that artificially inflates prices.

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Will GST implementation cause a temporary rise in Malaysian house prices?

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