PETALING JAYA: The outlook for the overall economy and the property sector is expected to be cautious this year, due to the recent turn of events, said National House Buyers Association (HBA) secretary-general Chang Kim Loong (pix). "This is due to the recent turn of events, the sudden drop in global oil prices which in turn has caused our Ringgit to depreciate against other major currencies as well as the drop in the local stock market," he told SunBiz. One of the challenges that buyers will face next year is the Goods and Services Tax (GST) which will be implemented on April 1. "Although the government has said that the residential sector is 'exempted' from GST, in reality, property developers still incur GST in their 'input cost' as only zero rated sectors will not incur any GST in their input cost. This will invariably push up house prices to a small extent of say, 3% to 4%. "As property developers are not charitable organisations, they will not absorb such GST input cost in order to maintain current profit margins and pass on such costs in the form of higher property prices," said Chang. He said this will further burden house buyers in terms of affordability. In addition, banks may also take a more conservative approach in approving new loans, which would affect the chances of those hoping to buy houses in 2015. According to Chang, some of the measures in Budget 2014 did, to a some extent, achieve the results of lower property prices or arresting the steep rise of property prices. Some of these measures include the banning of Developer Interest Bearing Schemes (DIBS), higher real property gains tax (RPGT) and financing to be based on net amount after all rebates and discounts. "However, developers soon got innovative and started to further inflate property prices but only to give further rebates ranging from 5% to 10% of the purchase price. In effect, the house buyer could buy the property without any down payment. Some even guised it by offering 'Credit Note' to purchasers as if a certain percentage (of purchase price) has been paid to hoodwink the banks/financiers," he said. "Although the above may seem to make it easier for home buyers to acquire properties, it artificially inflates property prices and also pushes up prices of existing properties. In the long run, this further exacerbates the problem of high property prices and makes it even more difficult for future house buyers to acquire their own properties," he added. He said stronger measures are needed to address this issue and HBA's recommendations include implementing the build-then-sell 10:90 (BTS 10:90) concept, increasing the entry cost for owners of multiple properties via stamp duty on transfer of property, further tightening of the loan-to-value ratio for the third and subsequent mortgage as well as transparency and accountability in the 1Malaysia People's Housing Programme (PR1MA).