Median income does not reflect housing market - Study

SHAH ALAM – People under 40 are keen to purchase houses, but a recent study reveals housing unaffordability tops the list that deters them from buying a property.

A Consumer Sentiment Study (CSS) for H2 2023 by PropertyGuru Malaysia highlighted the challenges of those under 40 purchasing a home without government aid.

Data showed over half of the respondents were keen to enter the property market within the following year at 56 per cent, a slight increase compared to the previous CSS at 55 per cent.

National Property Information Centre (Napic) data from June 2023 recorded a decrease in loan applications and PropertyGuru’s Malaysia Property Market Report (MPMR) Q3 2023 saw a decline in property enquiries.

Malaysia PropertyGuru and iProperty Country Manager Sheldon Fernandez stated despite the high intention among Malaysians, the CSS survey found many remained wary of several barriers and the most prominent for respondents was housing unaffordability at 87 per cent.

He said the median income did not reflect the housing market, but consumers continued saving.

“When we are looking at the median multiple, it is about five times, which was seriously unaffordable leading people to rent.

“That said, the aspirations to purchase a home is still high, going with their financial willingness it would take time for first-time buyers to come into the market,” he said.

Sheldon stated how he was hopeful that Budget 2024 would improve on income as one side was focused on the property price while the other could focus on consumers.

“When we think about property affordability one side is the government schemes and affordable housing being improved to take stock and to ensure what was available towards the consumers.

“The other side is the buyer income as we look at income growth and property price growth over the few years, there’s a disparity with the median income growing 2.5 per cent last year.

“It must catch up to property price, but it’s encouraging to see the government play a role in this with the increase in the minimum wage, the increase in foreign investments towards higher paying jobs like data centres along with the government providing more opportunities for entrepreneurs and SME growth to potentially improve on income growth,” he said.

He stated the biggest challenge in Malaysia with property prices or affordable housing towards income growth was proper execution and if focused would prove to close the gap with each other.

The CSS had also shown financing as a major issue towards applying for affordable housing programmes at 45 per cent showing it was difficult to obtain financing, 38 per cent stating the choice of properties were not attractive, 37 per cent stating too many documents were required while 23 per cent were unfamiliar with the paperwork necessary.