There is a widely held perception that housing is increasingly out of reach for the younger generation of Malaysians. We think this perception is not quite accurate. Based on the commonly used median multiple — that is, comparing median house price to median income — housing affordability in Malaysia is roughly the same as it has always been, from the longer-term perspective.
Home ownership affordability, or rather, unaffordability, has been a hot-button issue for the longest time, not just domestically but also in many parts of the world. This is unsurprising. Housing is a basic human need (right), with significant long-term health and economic consequences to the country — and a politically sensitive issue for governments, as it is closely associated with discontent over rising income-wealth inequality, whether real or perceived.
Housing becomes less affordable when home price appreciation outpaces the people’s income growth. This happens for a myriad of reasons such as lagging wages growth and low savings, demand exceeding supply due to regulatory, zoning issues and/or land-labour limitations as well as rising costs of construction. And, of course, speculation or asset accumulation, given that property is a major asset class for investment.
