KUALA LUMPUR: The lack of an overall housing policy as well as down-the-line aspects such as the absence of regulation on price discovery in the primary market are to be blamed for inflated home prices, not valuation and valuation methodology, according to the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS).
In a statement, PEPS said that in the primary market, as opposed to the secondary market, there is poor price discovery. The public does not know the real price since the various incentives and rebates (amounting to in instances 20% to 30%) can only be known by a potential purchaser when he or she goes to buy a house.
“The real price less those incentives are hidden to the public until the point of actual purchase. This gives rise to the main ‘inefficiency’ in the housing market that is preventing house prices from adjusting downwards towards to a more sustainable and transparent median house price ratio as against income,” PEPS said in a statement today.
It said banks and financial institutions are doing their best, through proper market based valuations to discover this price and to lend based on the real prices so that in the event of a default on a loan they do not get lumbered with unsaleable properties at auctions.
“The oversupply in the market does not help but secondary market transactions supplied by valuers and estate agents do help.”
PEPS has called upon the Ministry of Housing & Local Government to immediately sanction that all advertisements in the primary market for houses to carry not only the “headline price” but the actual price at which a buyer can secure 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 added.
