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Houses in Malaysia "seriously unaffordable" by international standards, says Bank Negara official

KUALA LUMPUR (Oct 24): Houses in Malaysia are considered as “seriously unaffordable” by international standards, a Bank Negara Malaysia official said.

Director of Financial Surveillance Department Qaiser Iskandar Anwarudin said according to the median multiple methodology developed by Demographia International and recommended by the World Bank, United Nations and Harvard University, a house was deemed affordable if it was priced not more than three times of annual household income.

“The affordability (in Malaysia) has deteriorated with the median multiple affordability (the ratio of house price to households’ annual income) rising to 4.8 times in 2016 from 3.9 times in 2012,” he told reporters in a briefing here today.

He said most Malaysians could not afford to buy newly-launched houses with an average price stood at RM417,262 while the maximum affordable house price nationwide was at RM282,000.

Qaiser Iskandar said 73 per cent of unsold properties in Malaysia was not affordable with Johor recording the highest number of unsold houses followed by Selangor, Kuala Lumpur, Perak and Penang.

However, he said the situation of the property market in the country had improved with house prices going down at a moderate pace. 

“The proportion of new launches is also going higher towards the affordable houses as compared to the past,” he said.

Meanwhile, he said as of June this year, the housing loan approval rate stood at 74.6 per cent while in the segment for houses below RM300,000, the approval rate was around 70 per cent.

He said almost half of the loans approved this year was for first home buyers.

Qaiser Iskandar said 80 per cent of the housing loan rejection was because the house was priced more than three times of the applicant annual income ratio.

Other reasons were applicants already highly indebted, poor financial track record and documentation gaps, he added.

Nevertheless, he said there were various initiatives to facilitate home ownership especially for the B40 and M40 household segments, including guarantee schemes such as Skim Rumah Pertamaku and Skim Jaminan Kredit Perumahan; monthly repayment assistance such as Skim Perumahan Belia; and rent-to-own scheme announced in the 2020 Budget.

He said BNM itself had launched the Fund for Affordable Homes early this year with RM1 billion allocation for two years to facilitate home ownership for B40 households.

The fund, he said had enabled more than 1,100 households to own a home with a total asset value of RM180 million.

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