Despite the dominance of residential real estate, challenges persist in the Malaysian real estate market

Petaling Jaya: Despite the real estate market being dominated by residential real estate in the third quarter of 2023, economists say most homes still cost more than potential buyers can afford.

Muamarat Malaysia Berhad Bank chief economist Dr Mohd Afzanizam Abdul Rashid said the average house price in the third quarter of last year was RM458,751 and the average monthly mortgage repayment was RM1,971.

“Residential property accounted for 62.9% of the total property market share, with transaction value reaching RM28.4 billion. This led to a 22.6% increase in property transactions to reach RM57.1 billion.

“The number of unsold properties has fallen to 25,311 from a peak of 36,863 in the final quarter of 2021, reflecting a relatively stable residential real estate market characterized by stable house prices and declining inventory,” he said. It shows,” he said.

“However, despite the positive outlook, the “median multiple approach” used to set “affordable housing” prices at three times the median annual income is still within the price range of most homes in the country. showed that it was out of reach.”

Mohd Afzanizam said that as of 2022, the country’s median household income is RM6,338 per month, so the average Malaysian home buyer can technically buy a home for only around RM228,168. He said he could afford the purchase.

He said this figure pales in comparison to Kuala Lumpur’s average house price, which is a staggering RM770,543, while potential homebuyers can only afford a home for RM368,424.

“When it comes to Selangor, the average house price is RM520,456, while the affordable house price is only RM359,388. The average house price in Sarawak is RM504,542, while the average house price is RM179,208 It’s only affordable.

He also said the figures show that despite strong demand for affordable housing, there are disparities in housing availability, location and quality due to the disconnect between average income levels and house prices. He said there was.

He said many Malaysians face formidable challenges when purchasing a home, especially in urban areas such as the Klang Valley, Penang and Johor Bahru.

Mohd Afzanizam said that the increasing rural-to-urban migration has significantly increased the demand for housing in urban areas and intensified the challenges related to affordable housing prices, while the ownership of low-cost properties added that there is often a growing stigma associated with being perceived as “inferior quality”. Such units become less desirable.

“This hinders investment and development in the low-cost housing sector, so it is important to foster an inclusive and sustainable housing market.”

He said policy changes such as rationalizing subsidies, raising sales tax from 6% to 8% and a new 10% low-value goods tax are adding to these challenges, and are discouraging potential homeowners. He said it would weaken purchasing power.

Dr. Mohammad Idam Mohd Razak, Senior Lecturer in Economics at Mara University of Technology, said that before approving a home loan, banks consider not only income, but also credit score, debt-to-income ratio (DTI), job security, housing costs, etc. He also said that he was evaluating it.

“Bank Negara Malaysia currently mandates a DTI of up to 60%. This means that potential homebuyers with a gross salary of RM4,000 can only pay up to RM2,400 with a maximum monthly installment of 40% of their income. means that

“The standards for purchasing affordable housing are stringent, making it difficult for many qualified individuals and families to qualify. The process of applying for and securing ‘affordable housing’ “It’s complex and difficult,” he said, adding that this is causing an expansion of the rental market.

“A significant proportion of the population is currently not interested in owning a home, and as a result, more people are choosing to rent for life.”

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