Housing affordability in Malaysia has seen a decline over the years, with unaffordable housing remaining a key factor affecting cost of living.
Several studies using the price-income ratio (PIR) all show that the decline has reached a point where housing in several states is now “severely unaffordable” and considered “seriously unaffordable” in the country as a whole, reported The Sun citing World Bank’s Malaysia Economic Monitor “Making Ends Meet”.
“The lack of affordable housing is particularly severe among households earning less than RM5,000. It is estimated that the number of households in this income group far exceeds the supply of housing affordable to them, with 55% in Kuala Lumpur and 63% in Petaling district lacking access to housing that they can afford,” said the report.
“Households in the RM6,000 to RM10,000 income bracket can typically afford to purchase a home in the RM230,000 to RM500,000 price range, but the availability of such homes is very uneven. The market for such homes that are affordable for this income group is much tighter in Petaling district than in Kuala Lumpur, given Petaling’s growing undersupply and increase in prices.”
Suraya Ismail, Khazanah Research Institute director of research, said an affordable housing market can instantly be had if the prices of vacant properties are made affordable, depending on the location.
“GLCs and other private companies should behave like private entities and have the same level of competition so that they will bring house prices down. If house prices are high, you can’t ask GLCs to go in (to the market) and provide house prices that are low,” she noted.
“The whole industry must buck up and use productivity and innovation to bring house prices down.”
She is also opposed to the idea of a central agency overseeing the country’s affordable housing matters, saying that different cities have different economic growth and maturity.
“By having a central body to manage everything, you will be overwhelmed. You can do the coordination (for price range) but the execution, locality and dimension should be done at the state level,” she explained.
“In fact, I suggest that the federal (level) follow the state in terms of the price range. Land is a state matter and different regional corridors have different ways of development.”
For the report, the World Bank developed a more detailed housing affordability model compared to the PIR and is more suited for the examination of housing affordability across the distributions of house prices and incomes.