HOUSING affordability in every state has deteriorated in a span of over a decade, partly due to developers not addressing the needs of purchasers, said a report released by Khazanah Research Institute (KRI) today.

The report, Rethinking Housing: Between State, Market and Society, found there is a mismatch between annual median salary and median house price. 

Between 2012 and 2014, median household income grew at a compound annual growth rate (CAGR) of 11.7%, significantly lower than the growth of median house prices, which rose 23.5% from RM175,000 to RM280,000.

During the report presentation, KRI research director Suraya Ismail said certain policies such as the My Second Home initiative catered to expatriates, had led developers to shift focus to their housing needs.

Suraya, who is also the lead author of the report, said house prices are too high because developers are focused on achieving their trajectories.

Meanwhile, government schemes should be targeted at low income households who have the financial capacity to pay but are not able to access the commercial credit market.

“KRI maintains this is fine.”

Suraya said potential housebuyers should consider renting and only purchase a property when they have the financial capacity.

Although, the rent-to-own scheme, which allows tenants to rent the property for a certain number of years before owning the property, appears a feasible option, it may lead to potential buyers forking out more than they should.

“When you go for rent-to-own, they pay higher. When your wages go up then you buy.”

The report said the government has different roles to play to cater to the social and market sectors.

It added that the government should concentrate on building good quality homes for the social segment and regulate the market to ensure operating environment is competitive.

Public feedback is also necessary to ensure good housing standards. 

“Without public feedback on the process, policymakers might find themselves enforcing a standard that is disengaged from the true needs of the people.”

The report stated it is important to ensure property prices in cities match income levels of their residents.

For example, the house prices in Seremban is similar to that of the Klang Valley, whereas wage levels of Seremban folk are lower than those working in Kuala Lumpur.

Suraya said if wage levels increase in other major cities, it may lead to people seeking employment there, in turn freeing up space in the densely populated Klang Valley. – April 25, 2019