IN FOCUS: Why have Malaysia’s houses remained ‘seriously unaffordable’ for a decade and counting? | USAEMALL.com

On Feb 26, Senator Michael Mujah Lihan told parliament’s upper house that property prices in major cities across Malaysia had soared to levels that were increasingly unaffordable.

“Although construction costs and property values have risen, average wage growth has not kept pace,” he reportedly said, calling for the government to implement stronger price controls and more targeted tax incentives.

A month earlier, Parit Member of Parliament Muhammad Ismi Mat Taib had asked how the government was tackling high home prices, which he described as a burden on first-time buyers.

Analysts say homes remain unaffordable due to slow income growth, longer loan tenures, and rising costs for developers. These developers in turn price homes higher for larger profit margins.

Despite the marginal improvement in affordability, they warned that the consistently high prices mean homes are beyond the reach of many Malaysians, and contribute to the rising share of residential loans in household debt.

“It is almost impossible for first-timers to buy a property in centralised locations especially in the urban areas,” Olive Tree Property Consultants chief executive Samuel Tan told CNA.

“We tend to opine that some forms of land price (government) subsidy are essential to bring down the development cost and pricing of affordable houses.”

IS THE GOVERNMENT DOING ENOUGH?

Recognising that homes on the open market can be unaffordable for some Malaysians, the federal and state governments have introduced several housing schemes to help the bottom 40 per cent and middle 40 per cent income earners.

These schemes have eligibility criteria that include citizenship and household income, and offer homes capped at around RM300,000 with hybrid financing models, including the possibility of rent-to-own.

The federal government’s schemes include PR1MA, where a government-linked company builds affordable homes across the country either directly or through voluntary joint ventures with private developers. Prices range from RM150,000 to more than RM500,000, depending on location and project.

Residensi Wilayah is another federal government affordable housing scheme that is designed for Malaysians working in the federal territories – Kuala Lumpur, Putrajaya and Labuan. Prices range from RM200,000 to more than RM400,000.