The National House Buyers Association (HBA) says “ridiculous” prices are the real reason many Malaysians are unable to afford property, to the point where even households earning RM9,000 struggle to buy a home.
In an interview with FMT, the association’s honorary secretary-general Chang Kim Loong dismissed the notion that banks were to blame for unsold properties. This was after the Real Estate and Housing Developers’ Association (Rehda) cited end-financing issues and loan rejections as the main reasons for unsold properties, with rejection rates as high as 60%.
“If you look at Bank Negara Malaysia’s 2016 annual report, you’ll see that since 2012, the increase in prices of houses has outstripped the rise of income levels,” Chang said.
He said this indicated that average Malaysians just couldn’t afford a home based on their income. Chang explained the affordability rating concept, the recommended benchmark for the affordability of homes.
This rating, he said, was derived from dividing the price of a house by the borrowers’ annual household income.
“Essentially, according to this benchmark, an affordable house shouldn’t cost more than three times a borrower’s annual household income.
“So if the borrower’s annual household income is, say, RM10,000 per month or RM120,000 per year, then the borrower should only be eyeing properties priced RM360,000 and below.”
Chang said this benchmark had been endorsed by reputable international bodies including the World Bank and the United Nations, as well Bank Negara and local think tanks such as Khazanah Research Institute.
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