Malaysia’s Properties Are ‘Seriously Unaffordable’

Malaysia property

Khazanah Research Institute’s (KRI) latest research report found that Malaysia’s residential property market to be “seriously unaffordable”.

The findings show that the median house price is 4.4 times the median annual household income.

Datuk Charon Mokhzani, the managing director of KRI, explained during the launch of the report that an affordable market is one where median house price is three times median annual household income.

“The challenge of providing affordable homes for all households has captured the focus of policymakers. In Malaysia, policy initiatives relating to housing affordability have been through transferring physical or financial resources to low-income households. Middle-income households, however, are neither eligible for social housing nor able to afford private sector-supplied houses,” Charon said.

“Policy should therefore be geared to improving the elasticity of housing supply, to make it more responsive to the needs of all sections of the population,” he added.

The report also indicated that the rising house prices is perceived as a determining factor for the increasing land prices, instead of the other way around. This is due to the unwavering demand for the increased land prices, as developers are willing to pay for them due to the increasing housing prices.

The rising house prices is not necessarily be due to the construction costs, as there was no consequent drop in house prices even when the Malaysian construction cost has been falling, said Charon.

“The provision of social housing for the majority of population will exert financial pressures on government spending. As Malaysia becomes more urbanised, the demand for affordable housing will increase. If the trend is not addressed, the bottom 40% and middle 40% of income earners will likely require social housing in future. There is a strong need to reform the supply-side and to enhance its capacity to develop a sustainable and responsive housing sector,” Charon said.


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