PETALING JAYA: The Real Estate and Housing Developers' Association Malaysia (Redha) expects property prices to increase by 6.2% once the Goods and Services Tax (GST) kicks in on April 1, due to certain building materials which are taxed under the regime.

Residential properties are exempt from GST.

"94% of the survey's respondents are very worried over the GST's impact on overall business costs", Rehda president Datuk Seri Fateh Iskandar Mohamed Mansor said during the launch of its' property industry survey results for the second half of 2014, adding that it is one of the key issues faced by the property sector presently.

He said the other equally important issues were financing for buyers, as well as challenges related to utility service providers and local authorities.

Among other examples indicating how serious things were, Iskandar said launches of residential and commercial units for the second half of 2014 dropped by 62.9% and 81.6% respectively, in contrast to the figures seen in the first half.

"Most distressing are first-time buyers wanting but (being) unable to purchase affordable housing," noting that from 2013 to 2014, loan rejections over sales rose by 7%.

Iskandar said its issues with utilities service providers were on ensuring proper access to electricity, water, and sewage for their new projects.

He also observed that slow approval processes, inconsistent policies/guidelines and high development charges from the local authorities such as town councils only served to compound matters.

"The government on a state and federal level ought to engage the private sector in addressing these issues effectively, in particular to increase the purchasing power of Malaysians," he urged.