Easing mortgage lending insufficient to promote home ownership — MARC

KUALA LUMPUR (Nov 2): The proposed loosening of mortgage lending is insufficient to promote home ownership in the country as there is a mismatch between housing price and income levels, said the Malaysian Rating Corp Bhd (MARC).

The lack of affordable housing, and not access to credit, is what deters home ownership, said the ratings agency, citing data in the "Housing Watch' website created by Bank Negara Malaysia.

"Since 2012, the pace of growth of house prices has outstripped that of income levels," said MARC in a statement today. "This is due in part to the supply of new housing increasingly becoming concentrated in the higher-end segments."

"As the median annual household income stands at around RM63,000, many find the bulk of newly launched homes unaffordable," it added.

Also, the growth pace of Malaysia's median monthly household income on a compounded annual growth rate basis has moderated in recent years, said MARC. If this trend continued, the issue of housing affordability will persist, it said.

The agency pointed out that household debt in Malaysia, at 88.4% of gross domestic product, is among the highest in this region.

According to MARC, the affordable housing problem needs to be tackled from a quality of life development issue perspective using holistic long-term policy measures.

This, it said, would require, among other things, a rebalancing of supply-demand dynamics and effective implementation of medium- and long-term development measures to accelerate household income growth.

Easing access to credit, said MARC, would not be helpful in lifting the growth pace of Malaysia's median monthly household, but may instead significantly raise domestic financial sector risks. — theedgemarkets.com

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