Residential price index will control property prices, reduce risk of crisis

Content image - Phnom Penh Post
In 2021, there were 4,303 construction projects nationwide representing a floor area of nearly 13 million square metres. Heng Chivoan

Real estate experts welcomed the Residential Property Price Index (RPPI), saying it will help Cambodia control the rise in housing prices to a certain extent and reduce the risk of a crisis in the industry.

PropNex Cambodia Real Estate managing director Ann Sothida said transactions and pricing of homes or properties in Cambodia are currently “not clear” and there is no official record.

As such, the implementation of RPPI is considered a “good start” as it would serve as a basis for measuring the fluctuation of housing prices in accordance to a standard.

In a sense, RPPI would enable the authorities to intervene or manage the property sector better and keep the situation in check, she said.

“Not only does rising housing or real estate pricing lead to inflation but declining investments in the housing sector and the low number of home ownerships could also lead to an economic crisis.

“Thus, RPPI is very important for the government [as it can] monitor the fluctuation of housing prices and intervene so that people can afford to buy their own homes,” Sothida explained.

According to Century 21 Cambodia executive director Grace Rachny Fong, RPPI is a collection of “government-sponsored news and statistics” based on accurate data collection and formal analysis that is “acceptable” by all quarters.

The index will make it easier for those seeking information on housing or land prices, and help the government develop master plans.

In addition, Grace said, the government would be able to monitor all transactions in the sector and collect taxes accordingly.

The index will also encourage the buying and selling of properties and make it easier for people, including foreign investors to assess market prices, thereby attracting them to invest in Cambodia.

“It will be easy to find information on housing and property prices in the areas they want. This way we build the confidence for foreign investors who wish to invest in Cambodia,” she told The Post on June 8.

Cambodian Valuers and Estate Agents Association president Chrek Soknim said RPPI will become a tool for real estate professionals to make “accurate” housing appraisals.

“When there is information on the housing price index, it not only facilitates local trading transactions, but also attracts locals to invest in Cambodia,” he added.

At the launch of the RPPI on June 6, NBC assistant governor Chea Serey said it was a new step and achievement in compiling economic statistics and finance to analyse and evaluate the real estate and construction sectors.

The growth of the sectors is also part of the economic diversification process which can increase resilience to any economic impact as well as absorb some of the labour force to serve the construction sector in supporting the economy growth.

Prior to the Covid-19 outbreak in Cambodia, the construction and real estate sectors were key growth sectors, employing nearly 500,000 workers, according to a 2019 survey.

“The sectors have become important pillars of economic growth. Information and data related to the sectors are even more important for economic and monetary policy makers to monitor macroeconomic imbalances and assess the risks that can occur in related sectors, especially the financial sector.

“The introduction of the housing price index will make a significant contribution to monitoring, evaluating and formulating development policies as well as measures to minimise risks in order to maintain macroeconomic stability,” Serey said.

In 2021, the Ministry of Land Management, Urban Planning and Construction showed that there were 4,303 construction projects nationwide representing a floor area of nearly 13 million square metres.

Total capital investment approved stood over $5.33 billion, down 31.21 per cent from 2020.