Is Property Price Growth Keeping Pace with Salary Increases?

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The dream of owning a home is a shared ambition for many Malaysians, serving as a symbol of stability and achievement. However, the path to homeownership is becoming increasingly challenging due to the rapid rise in property prices outpacing salary growth. This disparity raises critical questions about the feasibility of achieving this milestone in today’s economic landscape and what measures can be taken to bridge the gap.

The Disparity Between Salaries and House Prices

Over the past decade, Malaysia has witnessed a significant discrepancy between the growth of median household incomes and the surge in house prices. From 2012 to 2022, while the median annual household income saw a cumulative increase of 5.7% to RM76,506, the median house price escalated at a yearly rate of 7.5%, reaching RM350,000 by 2022. This imbalance highlights a growing affordability issue, with property prices outstripping the pace at which incomes are rising.

The State of Housing Affordability in Malaysia

Housing affordability is a pressing issue, with Malaysia falling into the “seriously unaffordable” category according to Demographia’s standards. The median multiple of housing affordability in Malaysia stands at 4.6, indicating that a household would need 4.6 years of total income to afford a median-priced home. This ratio has worsened from 3.9 in 2012, peaking at 4.8 in 2016, and slightly improving before rising again to the current level.


Regional Disparities in Affordability

The challenge of affordability is not uniform across Malaysia. Sabah and Sarawak report the highest median multiples, making them the least affordable states, despite their lower median house prices compared to urban centers. Conversely, Melaka offers the most affordable housing options, with a median multiple of 2.3, far below the national average.

Government Interventions and Personal Strategies

In response to this growing concern, the Malaysian government has committed to increasing the availability of affordable housing. Plans to construct approximately 500,000 affordable homes by 2025 aim to provide relief to lower-income earners. These initiatives, coupled with rent-to-own schemes, offer potential pathways to homeownership for those struggling with the initial financial barriers.

Rent-to-own schemes, in particular, present a unique opportunity for Malaysians. These schemes allow individuals to “rent” their future home, with the option to purchase at the end of a set period, typically five years. This period provides potential homeowners the chance to improve their financial standing and secure a mortgage at a more favorable rate, based on their future, presumably higher, salary.


The journey to homeownership in Malaysia is fraught with challenges, particularly in light of the growing divide between salary growth and house price inflation. However, through a combination of government initiatives and innovative financial solutions such as rent-to-own schemes, there is hope for Malaysians aspiring to own a home. These measures, alongside a strategic approach to personal finance, can help bridge the gap, making the dream of homeownership a more achievable reality for many.

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