By MARK RAO / Pic By BLOOMBERG
THE total unsold residential properties in the country stood at a decade high of 146,497 units in the second quarter of 2017 (2Q17), an increase from the 130,690 unsold units reported in the previous quarter.
Bank Negara Malaysia’s (BNM) latest quarterly bulletin stated that a supply and demand mismatch as well as slower income growth had also led to a housing affordability issue in Malaysia.
The report also revealed that 82% of the unsold units during the 2Q17 were priced above RM250,000, in spite of financing that had been made available to eligible borrowers and home purchasers.
It stated that over 70% of the housing loans accorded in 2016 were to first-time buyers and close to twothirds were for those who bought homes that are priced below RM500,000.
“Together with a low state of financial literacy among a majority of Malaysian households, and a cultural preference towards home-ownership instead of renting, these have contributed to the high demand for house purchases,” the central bank said.
To address the issue, the monetary authority had outlined five strategies including centralising affordable housing initiatives; establishing an integrated housing database; and setting up an applicant registry for affordable housing planning.
The bank also suggested reducing the cost barrier that prevented the public from purchasing affordable homes; enhancing financial literacy to rehabilitate household balance sheets; and improving the rental market by strengthening the legal framework in Malaysia.
According to BNM, a shortage of affordable homes is also prevalent due to the mismatch in household income and house prices.
It stated that houses in the country were “seriously unaffordable” in 2016 as actual median house prices stood at RM313,000 for the year, beyond the means of many households.
This was also above the estimated maximum affordable house price at RM282,000, based on the housing cost burden approach, while median national household income was only at RM5,228.
“The housing affordability issue is largely due to the supply-demand mismatch and slower income growth,” the bulletin read.
BNM added that housing prices have also outpaced the growth in household income.
“On the supply side, structural and cyclical factors in the housing market in Malaysia have resulted in a failure of the market to provide an adequate supply of affordable housing for the masses,” it added.