UNREALISTICALLY high pricing for homes is adding to the grievances of Malaysians grappling with rising cost of living, as affordable housing becomes a key issue for the government of Prime Minister Najib Razak to tackle, reports Bloomberg.

According to Bank Negara Malaysia’s estimates, there is a current shortage of 960,000 units of affordable housing, with the number projected to reach one million units by 2020.

The central bank has refuted claims that limited access to financing is deterring home ownership, saying instead that the property industry should boost efforts to cut costs and accelerate supply.

“It is an issue of not having enough income and houses being too expensive,” BNM governor Muhammad Ibrahim told a conference in August, reiterating that “the problem is not about access to credit” and the lender “must have the courage to say it loudly and clearly to the public”.

“It’s a very important issue for Prime Minister Najib to address,” Institute for Democracy and Economic Affairs chief executive officer Wan Saiful Wan Jan was quoted as saying.

“I’m just really wondering what more can Najib do other than provide heavy subsidies, at a level that maybe even the government cannot afford to do.”

The median house price in Malaysia was 4.4 times the median annual household income in latest available data, making the housing market “seriously unaffordable” compared with global standards, according to a 2015 report by state-run Khazanah Research Institute.

The median annual household income is estimated at around RM63,000.

The report classed an affordable market as one with a median multiple of three times. Only 20% of houses launched in the first quarter of this year were priced below RM250,000. 

According to BNM, this figure is lower than the 33% between 2010 and 2014. The bulk of new homes cost between RM250,000 and RM500,000. On the other hand, lending rates remained at 3% from last year.

Paul Selvaraj, secretary-general of the Federation of Malaysian Consumers Associations, said developers should instead be looking at their own industry and not blaming strict mortgage and financing options for the soft market.

“The focus should be on building houses which people can afford, not building expensive houses and then trying to push them, and then complaining that the banks are not giving loans,” he was quoted as saying by Bloomberg.

“The reason people are having problems getting loans is because the houses are not affordable. It’s beyond their repayment ability,” he said.

Some developers are slowly starting to fill the demand. Mah Sing Group Bhd, the nation’s third largest, is selling apartments within 5km from Kuala Lumpur’s centre with prices starting from RM328,000 for a 650 sq ft unit. That’s within the maximum price a family on the city’s median income could afford.

Najib has pledged to focus on boosting living standards when he tables Budget 2017 on October 27.

He may announce an increase in the number of affordable homes built by state-linked companies, tax relief for private developers and subsidies for affordable home buyers, RHB Research Institute said last month. – October 11, 2017.