[Exclusive] Inflated Property Valuations, High-Value Loans, and Increased Loan Premiums Fuelled a Housing Bubble

Article Summary

Nanyang Property reports that “mark-up loans” - deals where a property’s value is artificially inflated to obtain a larger mortgage, create short-term gains but heighten long-term risks across Malaysia’s housing market. Incentives along the chain (buyer, agent, valuer, lender) can encourage higher prices, while parts of the valuation process still operate semi-offline, leaving room for weak controls. The piece cites market scale and risk indicators (e.g., 2023 - 2024 transactions of roughly RM200 - 230 billion, with over 90% bank-financed; about 8% of credit losses linked to over-exposure, estimated at more than RM300 million a year). Experts call for tighter discipline (professional indemnity cover, adherence to Malaysian Valuation Standards) and more transparent, digital workflows. The article also notes that knowingly inflating prices to secure bigger loans may constitute fraud under Malaysian Bar guidance, and highlights cases abroad where similar conduct led to convictions. PropTech platforms that standardise processes and audit trails are presented as part of the solution to rebuild trust and sustainability in property lending.

Key Takeaways

• “Mark-up loan” practices can erode trust and contribute to systemic risk despite appearing mutually beneficial in the short term.
• Malaysia’s property transactions totalled ~RM200b (2023) and ~RM230b (2024), with >90% financed by banks; around 8% of losses are tied to over-exposure (≈RM300m+ annually).
• Pressure points include requests for “indicative values” before full due diligence and limited end-to-end digital oversight in parts of the process.
• Professional safeguards (e.g., PI insurance) and strict adherence to MVS are emphasised to protect market integrity.
• The Malaysian Bar has long cautioned that inflating prices to secure larger loans may constitute criminal fraud; comparable cases overseas resulted in prosecutions.
• Industry voices advocate PropTech platforms that centralise stakeholders, standardise workflows, and provide audit trails to enhance transparency.

‍Read the original feature in Mandarin on eNanyangDaily here