How Affordable Are Malaysian Homes? | Interactive Map

How Affordable Are Malaysian Homes? | Interactive Map

If you’re looking to buy a new home, or just wondering if you can afford one, you’ll want to keep an eye on how much home prices cost in your area. So here’s what you need to know about the average home prices in Malaysia, how to estimate home affordability and what to do if you’re having trouble affording your first home.

Explore Malaysian home prices

Residential property prices can vary depending on which area and state you live in. You can explore home prices throughout Malaysia with the map below:

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Where is this data from?

Price data was compiled from the National Property Information Centre’s (NAPIC) 2020 state reports, which collected sample residential property prices for thousands of locations across Malaysia. Then, Google’s location services were used to determine the geographic coordinates of these areas.

What are the average home prices in Malaysia?

According to NAPIC, the median home price in Malaysia in the first quarter of 2021 was RM300,000.

A median price means that half of the homes are priced lower, while the other half are priced higher. This is a better measure than taking the average price of all homes, as home prices that are significantly higher or lower could skew the measurement.

Median home prices can also vary by state:

 Median house price (RM)
Malaysia300,000
Johor350,000
Kedah205,000
Kelantan234,000
Melaka208,000
Negeri Sembilan220,000
Pahang230,000
Pulau Pinang300,000
Perak235,000
Perlis235,000
Selangor395,000
Terengganu290,000
Sabah300,000
Sarawak330,000
Kuala Lumpur498,000
Labuan325,000
Putrajaya650,000

Source: The Residential Prices Quarterly Update Q1 2021

How affordable are Malaysian homes?

Are these home prices affordable? One way of defining affordability is to compare income and home prices. The Khazanah Research Institute (KRI) uses the median multiple, which is a global standard used to estimate home affordability.

median multiple = median house price / median gross annual household income

According to the Demographia International Housing Affordability report, a median multiple of 3.0 and under indicates affordable housing:

  • 0 and under – affordable
  • 1 to 4.0 – moderately unaffordable
  • 1 to 5.0 – seriously unaffordable
  • 1 and over – severely unaffordable

Malaysia’s median gross household income is RM5,873 according to the latest official statistics in 2019, while the median home price is RM300,000 as of 2021. This puts its median multiple at 4.3, which falls under the “seriously unaffordable” category.

On top of that, salaries have fallen in 2020 due to the pandemic, which would lead to a decrease in household income. This would mean that Malaysia’s actual median multiple is higher than previously reported.

But the KRI points out that the median multiple does not measure personal housing affordability. Rather, the three times median multiple “signals that the market provides a distribution of housing and house prices that are subject to minimal distortions if any, and where supply is able to meet effective demand”.

To gauge your personal home affordability, the National House Buyers Association’s (HBA) suggests not exceeding one third (or 33.33%) of your DSR on a home loan.

What can you do if you’re having trouble affording a home?

If you’re earning an average income, or below that, it can be tough to afford your first home. Saving for the upfront costs (which can be around 15% of your home value, including a 10% down payment) can also be a struggle. Here are a few things you can do to help.

a) Apply for affordable housing assistance

In Malaysia, there are several affordable housing schemes that provide low-cost or medium-cost housing solutions, as well as financing to help you cover upfront housing costs.

However, you may need to meet certain income or age requirements. On top of that, some schemes work through a balloting system. For instance, the PR1MA housing scheme selects successful applicants through a random balloting process. This means that getting a home could take months or even years.

b) Look in more affordable areas

Housing can be expensive in busy areas like central KL. But if you’re able to commute, you may be able to find more affordable options further away.

c) Use your EPF savings

Finally, you could consider withdrawing from your Employees Provident Fund (EPF) savings to buy a home, build a home or reduce your home loan amount. However, this means having less for your retirement, and most Malaysians already don’t have enough saved for retirement.

Besides that, home loan interest rates are relatively low. You may only incur around 3% interest per annum. On the other hand, the EPF has historically delivered returns of around 5% to 6% per year. Withdrawing from EPF would mean foregoing these investment returns, so it’s not a decision to take lightly.

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