GST not sole factor influencing house prices, says Chua

The government today stressed that there are other factors when determining residential property prices, although the upcoming goods and services tax (GST) may cause an increase of between one and two per cent.

A study has shown that the cost of building materials, location and land acquisition, as well as supply and demand,are the main driving forces in determining price, said Deputy Finance Minister Datuk Chua Tee Yong.

Speaking at a media briefing here today, he said the prices of residential properties in most cities have been increasing by six per cent annually, and in certain areas, at around 10-20 per cent.

"Actually, developers will not raise prices unless there is an increase in demand.

"At present, new property launches have experienced a slowdown, due to tighter lending conditions.

"This indicates that the GST is part of the cost, but not the main issue in determining the prices of residential properties," Chua said.