Alleviating asymmetric information in property markets: Building performance and product quality as signals for consumers

As housing and commercial property markets shift from predominantly supply-push to demand-pull in some parts of Western Europe, consumers will place greater value on information regarding a building's degree of quality and performance. However, information asymmetries in present markets indicate the supply side fails to meet the building information needs of the demand side about the quality, performance and service provided by a facility. Therefore, when property is traded, the demand side's willingness to pay for value decreases and the initial price becomes the decisive factor. The question is raised whether the quality or the performance approach might stimulate the market to provide sufficient building information to counter asymmetric information. It is argued that both concepts are moving towards one another, that they are complementary and that they can form the basis of an interchanging communication medium. A comprehensive building information system is proposed that serves as a knowledge basis from which certain building information can be extracted depending on the type of enquiry. An array of indicators and criteria is categorized to allocate/match information on buildings to the parties involved. It is argued that creating an effective information exchange between market participants leads to a 'win-win' situation for the demand and supply sides in particular and for the whole construction and property industry in general. The details of this paper are related to housing property markets.