Property market needs better flow of information to become more efficient

KUALA LUMPUR: The local property market needs better flow of quality information in order to become more efficient, say experts.
“For example, the stock market is fairly efficient because of the information flow into the market. You have analyst reports, daily newspaper coverage and that information flow is actually what keeps the market fairly efficient,” said Khong & Jaafar Sdn Bhd managing director Elvin Fernandez.
“In the property market, things are a little different because a lot of transactions are not known to the market. Details of transactions are difficult to get,” he told reporters at the PropertyGuru Malaysia Real Estate Summit 2017 yesterday.
He said the property market is more “mysterious” compared with the stock market, which has a lot more information and analyses available to the public.
Elvin said more information on transactions and the various segments within the sector would enable buyers and investors to understand the market better.
Jones Lang Wootton executive director Prem Kumar concurred, saying that better information flow would lead to effective decision-making, transparency and create a higher level of maturity in the property market.
He said the property market lacks transparency especially in terms of transaction information, as the government does not have stringent requirements on how developers report their sales performance.
“They (developer) may have 50% of people who signed up as showing interest but whether all 50% would translate into sales, that becomes another consideration altogether,” he added.
Although the government should support a free market and avoid over regulating, certain controls and measures are needed to ensure that the public at large make well-informed decisions especially in property purchases, he said.
Prem noted that the mismatch between property prices and income levels has worsened with the increase in house prices rising faster than growth in income levels. He said the mismatch has become very glaring as the growth in income levels has been minimal over the past 30 years compared with house prices, that have easily grown 10 times over the same period.
Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Seri FD Mohamed Mansor said banks now take longer to inform potential house buyers about loan rejections.
“Before 2013, loan applicants were informed about rejections within 30 days. Today, it takes at least 60 days and sometimes up to 90 days. The potential buyer would then have to try and secure a loan with another bank. They would have lost 60 days in trying to obtain a loan,” he said in his keynote address.
He also said that incentives allocated for schemes to help first-time buyers, such as the RM30,000 incentive per unit built under the MyHome Scheme, are insufficient and urged the government to increase them in the coming Budget.