For most Malaysians, buying a home is a key goal in life. But achieving this isn’t always a possibility.
Given inflation and the rising cost of living, are our salaries enough to own a home in this day and age? How is the government assisting Malaysians, and what can citizens themselves do?
The data for the following observations is derived from median household income as reported by the statistics department from 2012-2022, as well as average house prices from the National Property Information Centre for the same period.
This data is also used to compute the median multiple of housing in Malaysia, by dividing median house prices by median annual household income. The higher the multiple, the more unaffordable housing will be.
Here is an overview of the situation in Malaysia, as well as steps you could take to make housing more affordable to you.
1. Salaries in Malaysia have not kept up with house prices
In 2012, a Malaysian household earned RM3,626 per month, or RM43,512 a year. By 2022, this annual salary grew by 5.7% on-year to RM76,506.
Meanwhile, the median house price in 2012 stood at RM170,000, and rose by a yearly rate of 7.5% to RM350,000 by 2022.
So, property increases have certainly outpaced growth of Malaysian salaries in the past decade. From 2012 to 2016, home prices increased by 15.3% every year, versus 9.6% in average growth of household income.
2. Houses are unaffordable in Malaysia
According to Demographia, a median multiple ranging from 4.1-5.0 indicates that houses are “seriously unaffordable”. Sadly, this is the category that houses in this country fall under.
Malaysia has a median multiple of 4.6 (RM350,000 / RM76,506), meaning you would need 4.6 years of income to pay for a house.
And the situation has only worsened over time: the median multiple in 2012 was 3.9, rising to a peak of 4.8 in 2016. It declined to 4.2 in 2019 but rose back up to the current 4.6.
Coupled with the rising cost of living, Malaysians will only find it harder to manage their spending on necessities and indulgences, on top of buying a home.
3. Sabah and Sarawak are the most affordable
Bad news for East Malaysians: Sabah and Sarawak boasted the highest median multiple in Malaysia – 7.0 and 6.5, respectively – in 2022.
Both states have a high median house price of about RM386,000, despite households only earning about RM55,000-RM60,000 a year.
Perhaps unsurprisingly, Kuala Lumpur is also unaffordable at 4.7, even though KL households earn the highest income in the country at RM122,808 per year.
This is followed by Kelantan (4.6), Penang (4.6), and Kedah (4.0). Homes are the most affordable in Melaka, with a median multiple of 2.3.
4. Consider government programmes
With salaries not keeping up with house prices, the government has said it would prioritise affordable housing by building more homes for lower-income earners.
Specifically, the plan is to build about 500,000 affordable homes by 2025 under various agencies and programmes such as PR1MA, PPR, Residensi Wilayah, Rumah Ikram Keluarga Malaysia, and SPNB. These offer prices ranging from RM100,000 to RM400,000, depending on the location and state.
5. Take advantage of rent-to-own schemes
A big roadblock for many is financing, since banks judge your ability to pay for a house based on your current salary. Thankfully, salaries (presumably) increase over time.
One solution would be to take advantage of rent-to-own schemes, which allow you to get a roof above your head for up to five years while you build up your finances.
At the end of the tenure, you can use your higher salary to get the appropriate funding to purchase the house at the original price as of five years ago.
The best part is, if you don’t think the house is suitable, you may opt to give it up and look for another one – no questions asked.
Source: FMT
