Bank Negara Malaysia (BNM) has slammed the Real Estate and Housing Developers’ Association’s (REHDA) definition of affordable housing as inaccurate, saying homes priced at RM300,000 and above cannot be called “affordable”, reported The Sun Daily.
“Houses in the price range of RM300,000 to RM500,000 are beyond what is affordable to the households earning the median income in Malaysia,” said BNM in its FactWatch website in response to the statement of REHDA.
BNM noted that based on international standards using the Housing Cost Burden approach, an affordable home’s maximum price stands at only around RM282,000. This comes as the median household income in 2016 was RM5,228, showed the Household Income and Expenditure Survey by the Department of Statistics, Malaysia.
According to the central bank, there is still a mismatch between the profiles of demand by households and new housing supply.
“According to the 4th quarter 2017 data by National Property Information Centre (NAPIC), only 39 percent of new housing launches were priced up to RM300,000 over the years 2016-2017. This is insufficient to cater to the demand by 50 percent of households in Malaysia earning up to the median income,” it said.
“NAPIC data also suggests that the issue of unsold affordable homes priced below RM300,000 is the least severe compared to other price ranges. As at 4th quarter of 2017, unsold residential units priced below RM300,000 constitute the lowest share (20 percent) of total unsold residential properties under construction in Malaysia (RM300,000-RM500,000: 35 percent; above RM500,000: 45 percent).”
As such, BNM pointed to the importance of establishing an integrated database for housing supply and demand, considering the challenges of identifying the right price points in the right location for new homes.
“This is to ensure new housing supply is tailored towards the income and demographic profile of households across different locations. Beyond prices of new launches, equally important are other aspects of what constitutes an affordable home (e.g. connectivity from centres of employment, sufficient living space),” it added.