News: This is Why You Cannot Afford a Home in Malaysia

Oct 12, 2017

Bank Negara Malaysia (BNM) has launched a fact-based website that shows it’s the unaffordable prices that should be blamed for the country’s housing woes instead of its stringent lending rules.

In fact, the central bank’s Housing Watch portal revealed that the housing loan approvals in major cities across the country remains high at about 70 percent or higher.

It also noted that houses priced under RM250,000 only accounted 22 percent of the units launched for sale in Q1 2017, down from 33 percent in 2010 to 2014, while most comprised properties costing between RM250,000 and RM500,000.

Hence, BNM is urging real estate developers to bring down cost and significantly increase the supply of low-cost resident properties.

According to a 2015 report by Khazanah Research Institute, the median home price in Malaysia was equivalent to 4.4 times the median annual household income. As such, the government-owned think tank considers homes here as “seriously unaffordable” instead of affordable, as the latter requires a multiple of up to three.

Nevertheless, houses in the country are still cheaper versus other markets. For instance, the latest Demographia study ranked Kuala Lumpur as the eighth best housing market in terms of affordability among 18 metropolitan regions around the world. In comparison, those in Beijing and Hong Kong respectively cost 14.5 times and 19 times the median household annual income.

The move to launch the Housing Watch website follows calls by developers to the central bank to ease the latter’s lending regulations to make it easier for people to buy houses.

However, BNM stands firm on the rules implemented since 2010 to deter property speculation, promote prudent lending and bring down the country’s household debt, which is among the highest in Asia at 88.4 percent in 2016 but lower than 89.1 percent during the prior year.

Its balancing act to promote prudent lending and provide credit to home buyer is a tricky situation, said Wan Saiful Wan Jan, CEO of Institute for Democracy and Economic Affairs in Kuala Lumpur.

“I don’t think it’s right to say that there’s no problem with financing. But lending rules have to be both strict and balanced at the same time, otherwise we’ll have more non-performing loans and that is not good for anyone in the country.”


Image sourced from Malaysia Chronicle.


This article was edited by the editorial team of PropertyGuru. To contact them about this or other stories email


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