Housing market consistently “seriously unaffordable”

Khazanah Research Institute (KRI) proposes Malaysia shift to a ‘build-and-sell’ housing scheme to protect consumers from construction risks, as the current ‘sell-then-build’ model leaves buyers vulnerable.

KRI also highlighted that Malaysia’s housing market is ‘seriously unaffordable,’ with house prices rising faster than median household incomes.

They noted the growing household debt-to-GDP ratio and the dominance of housing credit in total household loans. KRI suggested shorter mortgage durations to curb house price inflation and promote affordability.

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Housing Market

“Housing credit constitutes the largest proportion of total household loans, increasing from 36 per cent in 1997 to 60.5 per cent in 2023, followed by loans for motor vehicles and personal use,” KRI director of research, Dr Suraya Ismail says, adding that housing loans with long durations must be discontinued.

“The longer the mortgage period, the more house prices will increase due to financing. Reducing mortgage periods will make house prices more affordable and create sustainable price increments in the market.”