Housing market has to be ‘reformed’, say academics

KUALA LUMPUR (Oct 16): Housing problems such as supply overhang and affordability issue will not be solved without “policy interventions to try to replicate the preferred market outcome”, say two academics.

“Whatever the cause of market failure, we know that if left to itself, the housing market will not solve these problems for reasons we fully understand,” wrote Dr Mohamed Aslam Haneef, Professor of Islamic Economics at the International Islamic University Malaysia, and Dr Geoffrey Williams, Professor at the Malaysia University of Science and Technology in an opinion piece that was carried by The Edge Malaysia this week.

“If the housing market is not reformed, we will continue to have empty units and people who want to buy but cannot afford to,” they said.

“When you have houses available at an ‘affordable’ price but no buyers at that price, then you have a market failure. This has many causes, which include poor information about the quality and therefore the prices of different properties, even in similar locations. It may also be due to poor coordination among buyers and sellers, a situation often intermediated by agents who encourage higher prices to get higher fees,” said the two dons.

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