KUALA LUMPUR – Middle-income earners in the Klang Valley have been locked out of the country’s housing market as they can only afford a flat, but do not qualify for low-cost public housing due to their salary, said the Finance Ministry.
In its Economic Outlook 2021 today, it said Malaysians in the M40 group – households earning between RM4,850 and RM10,959 – in Kuala Lumpur and Selangor can only afford a flat, while condominiums, apartments and terraces continue to be out of reach.
But, buyers in both states are not the only ones who face severe unaffordability.
The same is also experienced in Sabah, said the report.
“The issue of housing unaffordability remains severe among the M40 in the three states, in the period from 2015 to 2019.
“In Kuala Lumpur, the M40 could only afford flats... The situation in both Sabah and Selangor is similar to Kuala Lumpur. However, the issue of unaffordability is not as extreme.”
The three states were picked by the ministry for its study as Kuala Lumpur has the highest median house price among all states, while Sabah has the highest ratio of house price to income, and Selangor is the most populous state.
The report pointed out that the B40 group in the federal capital and Sabah continues to face severe unaffordability issues when it comes to owning any type of housing.
“Selangor has resolved this issue for the B40 with low-cost flats since 2016. Nevertheless, this group would find it challenging to upgrade to other types of housing properties in the state.”
It said the recent issue of unaffordable housing first stemmed from the 11.8% spike in prices between 2011 and 2013, compared to the household income increase of 9.9%.
This has rendered many types of houses unaffordable to many segments of society and forced the government to institute several measures to manage both demand and supply for homes, including introducing more public housing programmes.
“The impact of these measures can be seen in the slower rise in house prices at 6% from 2014 to 2019, slightly lower than the rate of the increase in household income at 6.3%.”
To further address the issue of unaffordability, the report said a more effective and efficient delivery of affordable housing programmes is imperative.
“Thus, alternative models of social housing programmes should be considered, taking into account new ownership models and innovative ways of financing and pricing mechanisms.”
However, home ownership in the country remains high, said the ministry, with 76.9% of households owning their own homes last year compared with 76.3% in 2016.
Malaysia also has a higher home ownership rate compared with more advanced countries, like Canada (66.3%), the US (65.3%), the UK (65.2%) and South Korea (56.8%). – The Vibes, November 6, 2020
