Malaysia’s housing affordability hasn’t improved despite a slowing market, property consultancy firm Rahim & Co International Sdn Bhd has revealed.
According to Rahim & Co, while the number of property transactions has fallen, property values didn’t drop by much – meaning that affordability is as tough as ever.
“An average terraced house would cost Malaysians 5.3 years of their household income,” commented Sulaiman Akhmady Mohd Saheh, research director at Rahim & Co. He added that between 2014 and 2016 there was a slight improvement in housing affordability as the income level of households increased. However, in 2016 and 2017, average income levels grew at a slower pace than house prices in Malaysia, leading to properties being being pulled out of reach for many prospective buyers.
A slow market
It is perhaps no surprise then that the number of unsold residential properties in Malaysia is now at its highest level in a decade. According to Malaysia’s central bank, Bank Negara Malaysia, a total of 146,497 homes remained unsold during the second quarter of 2017, up from 130,690 units in the first quarter. Almost 82% of the unsold units were priced above 250,000 ringgit (around £45,700), which is expensive in relation to average wages in the country.
On average, an affordable property in Malaysia for a family would be priced at up to 282,000 ringgit (£51,400), whereas the median home price during the period according to the report was 313,000 ringgit (£57,000). With the median national household income in Malaysia being just 5,228 ringgit (£953), the prices are out of reach for many families.
Between 2007 and 2016, according to the bank, house prices increased by 9.8%, while household income only went up by 8.3%. Additionally, new-builds in the region have been made up more of high-end properties than affordable ones since 2012 according to the report, which has further exacerbated the situation.