It would have been easier to say that Malaysia’s unaffordable housing crisis is bad and just end it there. If only it were that simple, but it is not.
The severity of the unaffordable housing dilemma in Malaysia is perhaps best described in two words - it’s complicated.
The facts and figures
Last month, Bank Negara Malaysia (BNM) official described housing in Malaysia as being “severely unaffordable” in comparison to international standards. Based on the median multiple methodology, a house is considered affordable if the price is not more than three times the annual household income.
Assuming you are married and earning RM5,000 per month as a family, your annual household income is RM 60,000 and a house three times your annual income would be affordable if priced at RM180,000. BNM’s official says the maximum affordable house price is only RM 282,000 based on the ratio and median national incomes across the country.
With the majority of new home prices falling just within the limit or above the range of affordability, there is an excess supply of properties in the market. The National Property Information Center (NAPIC) provided various statistics in its report for the first half of 2019 and the gist of the oversupply issue is:
32,810 units of properties are overhang units (overhang units are new and completed properties not sold after 6 months).
43 % of overhang units are condominiums and apartments.
Of the overhang amount, Johor has the highest number of overhang units (18.8%), followed by Kuala Lumpur (14.9%), Perak (17.6%) and Selangor (12.9%).
Bulk of overhang units are priced at RM201,000 to RM300,000 (22.3%) followed by homes at RM300,001 to RM400,000 (17.5%), and homes above RM1 mil (12.8%).
