Bank Negara: Houses in Malaysia remain unaffordable

KUALA LUMPUR (Feb 14): Malaysia faces a shortage of affordable houses for the masses, Bank Negara Malaysia (BNM) said today in its quarterly bulletin.

The central bank also revealed data that showed homes in the country were “seriously unaffordable" in 2016 compared to global standards, Bernama reported.

BNM has therefore come up with five strategies to overcome the problem which include “centralising affordable housing initiatives and setting up an integrated housing database and an applicant registry for planning and allocating affordable housing”.

It also suggested paring the cost barrier to affordable housing, rehabilitating household balance sheets by boosting financial literacy and improving the rental segment by strengthening the legal framework.

BNM said the maximum affordable house price in the country is RM282,000 based on the housing cost burden approach.

"However, actual median house price was RM313,000 (in 2016), beyond the means of many households, where the median national household income was only RM5,228," it said.

The central bank also said that undersupply of affordable houses remained a problem.

BNM said three factors contributing to housing unaffordability in Malaysia are a) mismatch between supply and demand for housing, b) new launches skewed towards the unaffordable range, and c) growth in house prices outpacing that of household income.

“Since 2012, new housing supply has consistently fallen short of the increase in demand by households,” Bernama reported the central bank saying.

During the year up to 1Q2017, just 24% of new launches were priced RM250,000 or less, a price level 35% of Malaysian households could afford.

Meanwhile house prices grew 9.8% while household income only increased 8.3% from 2007 to 2016.

From 2012 to 2014, the growth in house prices (26.5 per cent) was more than double the growth in income levels (12.4 per cent).

The end result of this supply-demand mismatch is that the level of total unsold residential properties in in the country were at a decade-high of 146,497 units as at 2Q2017, said BNM, Bernama reported.