Poor Price Discovery Causing Inflated House Prices

April 29, 2019

Home sizes shrink but the price will increase because of demand

The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) believes home price inflation is caused by the absence of an overall housing policy and down-the-line aspects such as the lack of price discovery regulation in the primary market. 

PEPS lamented the fact of poor price discovery in the primary market as compared to the secondary market, reported The Sun Daily.

READ MORE: Check out these factors that impact the value of your property!

According to the association, the real price remains unknown to the public because the various rebates and incentives are only revealed to the potential buyer upon actual purchase of a house.

“This gives rise to the main ‘inefficiency’ in the housing market that is preventing house prices from adjusting downwards towards a more sustainable and transparent median house price ratio, as against income,” PEPS stated.

The association noted that financial institutions and banks are doing their best to discover this price and to grant loans based on real prices so that in the case of a loan default, they will not be burdened with unsaleable properties.

With this, PEPS urged the Ministry of Housing & Local Government to require all primary housing market advertisements to carry both the “headline” and actual prices under which a buyer can make a purchase.

“The incentives and rebates must be detailed out in the advertisement and brochures, in the interest of transparency for the house-buying public and for assisting in creating a more efficient housing market,” it said.

 

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