KUALA LUMPUR – Access to affordable housing is more of a demand-supply issue
which calls for a carefully designed strategy of policy intervention rather than
the general perception of access to financing.
On the supply side, the housing market has not provided an adequate supply
of affordable housing for the lower and middle-income households.
In 2014, the shortage of affordable houses was estimated to be 960,000 and
set to increase to more than one million units by 2020, Bank Negara Malaysia
(BNM) said in its Annual Report 2016 released here today.
“While there are multiple programmes by the private sector, Federal
and state governments to supply affordable housing, the current level of
house-building is not sufficient to meet demand,” it said.
The issue of affordable housing reflects mainly the supply-demand imbalances
in Malaysia, which worsened during the 2012 – 2014 period and secondly the
effect of the supply shortfall on housing affordability was exacerbated by the
slower increase in household incomes relative to house prices, said BNM.
A third factor which worsened the housing affordability issue was the trend
in launching houses priced above RM250,000.
“While there were more launches during 2012 – 2014, the number of new
affordable housing units for households earning the median income (below
RM250,000) was fewer by 16,200 units per year since the period 2008 – 2009,” it
The oversupply of higher-end properties beyond what households can afford
resulted in a significant portion of these non-affordable properties remaining
unsold, said the central bank.
Hence, it shrugged off perception of the lack in end-financing, saying
that as at end-2016, about 56 per cent of loans outstanding were for houses
priced below RM250,000, while loans for houses priced between RM250,000 and
RM500,000 accounted for another 25 per cent.
Rejection rates for housing loan applications also fell further to 23.6 per
cent in 2016 (2012 – 2015: 26.1 per cent). These trends are evidence that
financing remained ample for eligible home buyers, it said.
Similarly, house builders continued to have access to bank financing.
Loans for real estate activities and residential property construction
increased at a healthy rate of 11.7 per cent in 2016 (2012 – 2014: 18.5 per
cent), reflecting the fewer property launches and incoming supply.
“The housing market in Malaysia has not been able to provide an adequate
supply of affordable housing for the masses. This undersupply of affordable
homes is likely to worsen, going forward, given the current trends in income and
demographic factors,” it warned.
Among the measures it listed to tackle the issue is by reducing costs
associated with the development of affordable housing.
Implementing cost-saving and productivity-enhancing technologies would
increase the speed and scale of delivery of affordable housing projects, going
On the demand side, the development of the rental market to bridge the
affordability gap could relieve some pressure on the government to build
all of the affordable housing needed.
“This should be complemented by more innovative schemes to fund the delivery
of affordable houses.
“As for end-financing, as in other countries, the central bank has
introduced macro-prudential measures to deter speculative activity in
the housing market and to avoid over-borrowing beyond one’s means,” the annual
It is important to note that these measures do not, in any way, hamper
access to financing for eligible borrowers including those who are first-time
“While the challenge of bridging the affordability gap is significant, the
experiences of other countries show that using a creative mix of innovative and
targeted policies was not unsurmountable,” it added.