By IZZAT RATNA
A study from RENTCafé has ranked Kuala Lumpur as the most affordable city for rental apartment seekers..
The the full study. shortlists the world’s best cities to work and live in, which looks at 10 different indicators including infrastructure, intellectual capital, sustainability and ease of doing business.
All these factors have been taken into consideration to determine how much money people earn in these cities, and whether their salaries are enough to afford a rental apartment.
“KL takes the top place on the list with rentals comprising about 20% of total income earned. Other cities in Asia that come close are Beijing in 7th place (27%) and Shanghai at 8th place with 28%.”
It said median household income of a Malaysian is about RM96,096 with average rent per year of RM19,305, followed by RM132,990 and RM36,036 for Beijing, as well as RM138,567 and RM38,867 for Shanghai.
“Traditionally, housing costs exceeding 30% of the household income have been viewed as a red flag, so this is also what we adopted as our first threshold,” the report said.
“We considered the cities where the average rent was 30% or less of the local median household income to be burden-free,” it added.
The report said the remainder of the list was divided into moderately rent-burdened, where 31% to 50% of income went to rentals, and severely rent-burdened cities where more than 51% of total income went towards rentals.
Although Tokyo, Hong Kong and Madrid technically fall into the moderately rent-burdened category, PwC said people in these cities still spend less than a third of their income to pay the rent.
“Taking into account this data, renting an apartment in more than half of the world’s cities of opportunities shouldn’t be an issue,” PwC said.
On the other end of the spectrum, Mexico City stood out as the most rent-burdened of the cities of opportunity, with a staggering 60% of its income shelled out for rent followed closely by Manhattan NYC (59%) and Lagos (57%).
“Despite boasting the largest income on our list, Singapore also registered a moderate rent burden of 44%,” it added.
PwC said although opportunities are plentiful in Mexico City, Manhattan and Lagos, no amount of indulgence is enough to overlook the severe rent burden that takes up more than half a household’s income each month at 60%, 59% and 57% respectively.
“In other words, in an average family with two earners, one of them works only to pay the rent, and it’s still not enough,” it said.
The report said rentals in Los Angeles took up 47% of monthly salaries and the situation was similar in Paris (46%) and Singapore (44%),” said PwC.
“You’ve got to give something to get something, that is just the way things work and there’s not much to do about it. The good news is there are plenty of great cities for growth and success where renting an apartment is not an issue at all,” it added.
The study is available at: https://www.rentcafe.com/blog/rental-market/rent-to-income-ratio-in-cities-of-opportunity-around-the-world/
This article has been edited following clarification from related parties.