Most Homes in Malaysia Remain Unaffordable, Say Economists

 

Despite a significant presence of residential properties in Malaysia's real estate market in the third quarter of 2023, economists warn that a vast majority of houses remain beyond the reach of potential buyers.

Bank Muamalat Malaysia Berhad's chief economist, Dr. Mohd Afzanizam Abdul Rashid, revealed that the average house price in the third quarter of 2023 stood at RM458,751, with monthly mortgage repayments averaging RM1,971. Although residential properties accounted for 62.9% of the total real estate market share, valued at RM28.4 billion, and witnessed a 22.6% increase in property transactions, reaching RM57.1 billion, affordability remains a critical concern.

Using the 'median multiple approach', which establishes 'affordable housing' prices at three times the median annual salary, it was found that most houses in Malaysia are unaffordable. With the median household income standing at RM6,338 per month as of 2022, the average homebuyer in Malaysia can only afford a house priced around RM228,168. However, in Kuala Lumpur, where the average house price is RM770,543, affordability drastically diminishes, with potential buyers only able to afford a house priced at RM368,424. Similar discrepancies were observed in other regions like Selangor and Sarawak.

The challenge of affordability is exacerbated by rural-to-urban migration, intensifying housing demand in cities such as the Klang Valley, Penang, and Johor Bahru. Additionally, the stigma associated with low-cost properties hampers investment in this segment, further limiting housing options for many Malaysians.

Moreover, stringent criteria for mortgage approval, including credit scores, debt-to-income ratios, and employment stability, add to the hurdles faced by aspiring homeowners. This has led to an increasing number of individuals opting to rent for life, further straining the housing market.

In response to these challenges, real estate consultancy firm Rahim & Co International Property Consultants Sdn Bhd emphasizes the importance of transit-oriented developments (TODs) to address affordability issues. By integrating TOD principles, developers can create affordable housing options conveniently located near workplaces and amenities, easing the burden on homebuyers.

While Malaysia's property market shows signs of stability, with a slight increase in transaction volume and value, the issue of affordability persists. To address this, there is a need to elevate the country's income levels and sustain efforts to bridge the affordability gap, ensuring a more inclusive and sustainable housing market for all Malaysians.

source - The Star & The Sun

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