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Buy property before Sales and Service Tax impacts hit
Published on: Wed, Aug 20, 2025
By: Hayati Dzulkifli Text Size: Wong advised prospective buyers to take advantage of existing housing and commercial stock available this year before developers begin factoring in the higher tax burden for new projects. Kota Kinabalu: 2025 is the best year to buy property before the impact of Sales and Service Tax (SST) begins to push up construction costs and property prices. Sabah Housing and Real Estate Developers Association (Shareda) President Datuk Johnny Wong Chen Yee said property buyers should act fast and consider buying this year as SST will drive property prices higher, by next year.
Advertisement Although the SST had come into force on July 1 and August 1, 2025, he said the impact will gradually affect the cost of building materials and construction, after six months' time. 'For now, properties that have already been built (before implementation of the SST) or are in progress are not much impacted yet. 'But six months down the road, by next year, you (property purchasers) will definitely see prices going up, not because developers want to increase them, but because of the taxes (SST),' he said. Johnny said this in a press conference to announce Shareda's annual property exhibition, PropEX 2025 here on Monday. The upcoming event is to be held for three days at Kinabatangan Hall at Sabah International Convention Centre (SICC), beginning August 22 until 24, to be officiated by Deputy Chief Minister II cum Local Government and Housing Minister Datuk Seri Dr Joachim Gunsalam. Nonetheless, Johnny said the property sector in Sabah will still be affected in a way because of the building material whereby import building material will still be imposed with Sales Tax. To a question, Johnny said commercial property prices are expected to rise by as much as 15 per cent following the implementation of the SST plus the Sales Tax. 'Since August 1, all commercial properties are subject to a six per cent SST. On top of this, contractors charge developers an additional six per cent, resulting in an effective increase of 10 to 12 per cent. 'When you add sales tax on building materials, which ranges from 5 to 10 per cent, the overall impact on commercial property can reach around 15 per cent,' he said. He explained that while residential properties enjoy certain SST exemptions, imported building materials are still subject to the Sales Tax, inevitably leading to higher costs. He said affordable homes will not be hit as badly as commercial properties, but they will still be affected to some extent due to the rise in building material prices. 'For residential properties, the impact is lower as the government has exempted housing purchases from SST. 'However, building materials such as steel bars still incur a sales tax of between 5 and 10 per cent, inevitably leading to a slight higher on the costs. 'This translates to an estimated increase of three to five per cent in housing prices. It's not as high as commercial properties, but buyers will still feel the pinch starting next year,' he said. Wong advised prospective buyers to take advantage of existing housing and commercial stock available this year before developers begin factoring in the higher tax burden for new projects. 'Properties that are already built or under construction now were not subject to the same cost increases. Moving forward, new projects will definitely be priced higher to absorb the tax,' he added. According to Johnny, commercial properties are expected to see sharper price increases as the full SST applies to the sector. 'That is why this year we see a lot of commercial units being put up for sale. By next year, the prices of new commercial properties will definitely rise significantly,' he added. Johnny encouraged buyers to take advantage of current offerings, highlighting that Shareda through PropEX 2025 has lined up various programs and promotions for prospective purchasers this year.
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