Housing Market Performance: A Comparative Study Between Malaysia, 

HOUSING MARKET PERFORMANCE: A COMPARATIVE STUDY BETWEEN MALAYSIA, ENGLAND AND KOREA

Dr Zailan Binti Mohd Isa

Tan Pek Voon

Shanti Rani

Asmah Mohd Nasir

Valuation and Property Services Department (JPPH)

Ministry of Finance, Malaysia

ABSTRACT

After the 1997 Asian Financial Crisis, unsold housing issues emerged in the Malaysian property market. During the period 2002-2005, the unsold units made up between 21.6% and 32.6% of the total units launched into the market. These rates are rather alarming when compared to advanced countries by their standards. Housing supply far exceeded the targeted number of units identified in the Sixth Malaysia Plan. Despite this, developers continued to build.

The objective of this study is to explore the underlying reasons for the unsold housing situation in Malaysia. It is to investigate as to why developers continue building in spite of the huge numbers of new housing units not being absorbed in the market". In trying to understand "what are the development and market processes that provide the developers to create and exploit opportunities, this research seeks the answers by examining the English and Korean housing markets. The analytical framework for this study is drawn from the institutional approach to housing analysis. The study examines the structure of housing provision and the inter-relationships of the agents involve in the process of housing production and their problematic outcomes.

This paper concludes that the unsold housing situation is contributed by the structural change in the housing industry. Over the last four decades, the industry has transformed from an immature to a mature market. In addition, the actions of agents within the structure of housing provision are biased towards their interests and act within their own spheres without looking at the outcome. Finally, the sell-then-build housing delivery system gives flexibility to developers to continue building as they do not have to rely heavily on project finance or their own capital to be in the housing development business. All these factors contribute to the unsold housing situation. The Asian financial crisis is not the root cause however, it seems to have aggravated the situation.

Keywords: Unsold housing, comparative study, developers' behaviour, housing finance, housing regulators, housing market structure