KUALA LUMPUR (Oct 21): Houses in Malaysia are considered "seriously unaffordable" based on the International Housing Affordability Survey standards.
According to the Finance Ministry's 2016/2017 Economic Report, the survey states that an affordable housing market is one with a median multiple or house price-to-income ratio of three and below.
The ministry said Malaysian housing's median multiple was at 4.4 in 2014.
"The imbalanced growth between house prices and income has affected affordability of houses, especially among the low and middle-income earners," the ministry said.
Citing Bank Negara Malaysia data, the Finance Ministry said average house prices rose at a compounded annual growth rate of 7.9% between 2009 and 2014. The rate exceeded the growth in average household income of 7.3% during the period.
Citing the the International Housing Affordability Survey, the Finance Ministry said across Malaysia's key states, there had been an uneven pace of growth between house prices and income.
The Kuala Lumpur and Penang housing market had median multiples of 5.4 and 5.2 respectively, hence, houses in these areas are "severely unaffordable".
Selangor's housing market had a multiple of four, which indicated "moderately unaffordable" houses in the state. Melaka houses are deemed affordable based on a multiple of three.
The ministry said there were challenges to ensure sufficient affordable houses due to overwhelming demand, scarcity of suitable land and more expensive construction materials.
"Nevertheless, the Government will continue to provide affordable housing by introducing strategies that benefit home buyers as well as stakeholders, which include developers and financial institutions," the ministry said.