Bad news for bear bear. Bear bear prediction gst will bulldoze prop price down? Wrong again.

If bear bear stil dun wan to buy, better go yaksi. Gf oso run away with zuiko. 
Rehda: GST will push up home prices by 2.6%

Tuesday, 21 October 2014

By: ISABELLE LAI

PETALING JAYA: Home prices will rise by about 2.6% once the goods and services tax (GST) comes into play, said the Real Estate and Housing Developers’ Association Malaysia (Rehda).

The chairman of the association’s task force on accounting and taxation, Datuk Ng Seing Liong, said that the calculation was based on its consultations with industry experts and member developers.

Rehda’s 2.6% estimate differs from that of the Customs Department, which expects the GST to have an impact of between 0.5% and 2% on house prices, assuming there’s no change in supply and demand conditions.

Ng said the association was in full support of the GST and concurred with Customs GST director Datuk Subromaniam Tholasy, who had said that land did not incur the 6% GST rate.

However, he said land was by no means the largest cost component in property development.

“As our calculation clearly spells out, the construction cost, which constitutes 46% of the total development, is not only the largest component but also the component which will attract the GST of 6%,” he said in a letter to StarBiz.

He said the GST on this component would inevitably lead to an increase in house prices.

Appending calculations for a housing unit originally priced at RM400,000, Ng said the price post-GST would be around RM410,560.

Under the 46% construction component, costs were broken down into non-service taxable and service taxable segments, representing 44%, or RM176,000, and 2%, or RM8,000, respectively.

Under the non-service taxable segment comes items such as cement/concrete, steel, bricks and sand, while the service taxable segment includes tiles and fittings/sanitary. Under the existing sales and service tax, no tax is imposed on the non-service taxable category, while the service taxable category has a tax of up to 10% imposed on it.

Post-GST, Rehda’s calculations showed that the non-service taxable cost had gone up to RM186,560, while the service taxable cost remained at RM8,000.

It maintained the same cost estimates for other items, including land (15% or RM60,000), infrastructure and pre-development works (10% or RM40,000), professional fees and marketing costs (6% or RM24,000), finance costs (6% or RM24,000) and profit (17% or RM68,000).

Ng said Rehda also disagreed with Subromaniam, who had said that developers could easily absorb cost increases as their margins were around 30%.

He said it was currently impossible for developers to earn up to a 30% profit, as most development costs were on the rise, along with various capital contributions and charges imposed on developers.

“On average, as tabulated in the calculation, developers, most of which are public-listed companies, are only making around 17% at best,” he said.
However, Ng said it was still too early to determine the actual house price increases post-GST, as Rehda was still in discussions with the Government and there appeared to be many more issues to be ironed out.

I'm in food line. Some wellknown food or drinks products spent more than 10% in ads. Some even up to 15% worldwide. Its norm in biz.

Further to tat adidas oso spent a lot to capture MU shirt sponsorship. Ppl who buy adidas actually contributing to footballer's wages.

Is 6% a lot??   
6% - agent/referral comission, advertisement, legal fees, showroom, probably staff wages.....   

Buyers mentality is the same regardless of food or drink or car or prop or any other product. I dun remember I eat adidas products.

Adui....... Malai gomen kopi money probably also add up into the marketing cost mah.....  cannot openly says kopi $ right?.... so hav to add here little bit add there litte bit to cover here and there mah....... what to do.... nowaday they also "lion open big mouth".........   

And for goodness sake..... everything changes.... why so many still always like to say "last time not like that.... "....... KNN.... last police wear shorts, these days long pants already mah....... Ladies last time wear long skirt, these days wear Xtra small shorts mah......   

300K + 20% = 360K aka up 60K

600K + 10= 660K aka up 60K

See even percentage come down but money value still the same, when 300K property jump to 600K, you think so easy earn extra 60K ?

What not sustainable, we already talk about this is previous version, people downgrade that all.

1.) Don't look at national average income, look only at top 30% Chinese income, as it is already proven Property is 95% chinese business.
2.) Don't imagine Fresh Grads without PAMA support or young exec can afford, those who have support no longer under their pay category isn't it ?
3.) People already accept downgrade, eg previously Manager grade can afford DSL & Condo now downgrade to Apartment, previously GM can afford SD downgrade to Condo/DSL, Director who can afford Bangalow downgrade to SD, those exec/junior manager probably need to line up for PR1MA or rent already.

So what is not sustainable ? more people rent compare to buy, owner can sustain their mortgage while waiting for perfect price to flip & buy some more.

Our car is among the most expensive in the world, even US, Hong Kong, Taiwan, Japan, Korea, Europe car price is cheaper than ours, but look at the car vs population, we are far ahead of them, is this not sustainable ? 

Magic answer downgrade loh, Camry in US is Auntie go supermarket car, here is GM Car, Civic in US is teenager school car, here is Manager car,  understand boh ?

During this 7 years.  Letrik naik. Paper naik. Gst in. Petrol naik. Everything naik. Salary naik but performance drop pula. So u expect to pay 2007 price for the 2014 service or jobs?

Businesses don't calculate like that. Selling price is based on supply and demand. If the market price in Mont Kiara is RM1m, it will be RM1m. Whether they spend the 6% or not, they will still sell you RM1m. Because the market price is like that. You cannot ask the developer "hey boss, please don't advertise and you pass back the cost saving of RM60,000 to me, and lower the price to RM940k". If you think you can, next time you buy a Toyota or Iphone, you can try to ask them too 

Things don't work that way. Just like fashion, cars, even McD KFC insurance etc. They have to increase the advertisement budget to stay in business. If their competitors are advertising, the one who don't spend on advertisement will be eliminated in business. That is the cruel world of business

Nowadays, developers have to spend on nice show village, big nice roads and entrance, elaborated landscaping along the main road, engage celebrities, models during their launch etc. Show village alone already cost them tens of millions.

Samsung Galaxy S5 spends more on advertisement compare to Samsung S... 

The more they spend on advetisement the better, as this will generate bigger economy pie.

Developer Y spend on advertisement, Newspaper, Web developer, Property Forum, TV Station, Printer & etc earn more, then they spends on gadget, clothing, cars, grocery & etc, all this will generate a bigger economy.

Assumed Prody open a restaurant, he normally get 50 customer a day, each customer average spends RM 20 in 2007, Fast forward to 2014 Prody can expect 2 scenario.

1.) House advertisement remain same percentage 2% on advertisement cost, Prody Food now cost 3-4 times, unless Prody run charity or else no way his business can survived, since those who getting advertisement income from developer not earning more. so now Prody restaurant getting 15 customer but still spend RM 20 per head.. 

or

2.) House advertisement increase to 6%, Prody restaurant now get 150 customer per day spend RM 60 per head, for merely 60K Prody extra spend on a house he buy, now his business income also X 6.

So which one you prefer ? 

No wonder you remain poor..

Your customer don't earn mean they don't spend in your business, how you get 60K & save 40K ,,

40K spend on thing with no ROI, you remained poor for long2 time, but don't worry Bear2 is with you, he just loss hi 8K GF, now with his 4K income he is low income group which don't need to pay income tax, both of you can line up for BR1M RM 950.