Buying a house is a dream for almost every person on the planet, including those who live in Malaysia. However, the concerns about home affordability have dramatically increased among buyers and property developers in Malaysia, including the Penang mainland
. The next few months will be very important for the property sector to determine future trends. However, core issues like home affordability are prevalent.
Housing Minister Zuraida Kamaruddin
is encouraging developers in Malaysia and the Penang mainland to develop affordable housing projects
with homes that cost RM500,000 or less. However, analysts and experts have declared that the housing issue cannot be solved just by making affordable houses in excess.
The evidence of this conclusion is the fact that in the first quarter of 2019, affordable houses in the range of RM200,000 and RM300,000 made up about 45% of property overhang. It shows that certain sections of society cannot afford to buy a house between this range either.
There are several reasons why Malaysians find it difficult to buy a house within their price range. Some of these challenges in home affordability are:
- The number of unsold houses is increasing at a much faster rate than the number of homes sold. Low sales have affected the entire real estate industry, including Penang property development.
- The balance sheet of the developers in Malaysia, including those in the Penang mainland is getting stretched due to the current condition of the property market and increasing debts.
- Overall, the property sector is gaining a poor outlook due to the low value of the property stocks.
- Many other factors — like increasing home supply, unequal prices, a rapid drop in home affordability, and extreme bank lending — have worsened the condition.
Property experts and analysts have often emphasised the fact that affordability is a very general term used by the authorities. It often neglects the problems faced by the M40 and B40 groups who are still facing immense issues in owning a house. Malaysians in the B40 and M40 groups cannot afford a house of RM500,000. Moreover, experts have called for the defining of specific affordability values from state to state because living conditions are different in every state and area. The exact definition is needed to address this serious issue of affordability versus affordable houses.
The Malaysian government is continually looking for new ways and strategies to alleviate the housing issues faced by a considerable majority of the population, and a number of steps have been taken to help home buyers. For instance, the revision and reintroduction of the Home Ownership Campaign from 1st June 2020 to 31st May 2021 is considered to be an essential step that will help many people. However, the current COVID-19 pandemic has derailed the plans of both the government and the buyers. There is still a lot of economic uncertainty in the country.
One of the primary factors that makes home affordability a significant issue is that home prices have increased much more than the income of the people. In 2019, the average price of a home was RM420,000, while the average per capita income was only RM45,000. It shows the great difference between house affordability and average income.
Malaysian authorities have taken steps to support the economy and home-buyers during this pandemic and facilitate property development, including property development in Penang. On 5th June, the HOC was reintroduced as part of the PENJANA plan.
Moreover, other measures like allowing 90% loan to value ratio mortgages have also been introduced. Reduction of the interest rates and overnight policy rate by Bank Negara has also garnered positive feedback from property developers in the country, including those on the Penang mainland and home buyers.
The Bottom Line
Needless to say, housing is the foundation of any society. Housing is a serious problem, not only in Malaysia but all around the world. It is important to address the issues of both affordability and affordable homes.
However, the current trend in Malaysia indicates affordability is one of the major issues faced by people. It is a long-term process, but the government and other institutions are taking various steps to mitigate the problem and facilitate people buying their own homes.