Malaysia’s Housing Affordability Crisis: A Younger Generation’s Struggle Amidst Rising Costs and Overhang

In major Malaysian cities, the dream of homeownership remains elusive for many, particularly the younger generation, due to a stark mismatch between median property prices and household incomes. Despite government initiatives like the National Affordable Housing Policy aimed at addressing this issue holistically, a significant overhang of unsold properties valued at RM18.42 billion as of the end of 2022 underscores the severity of the affordability crisis.

Dr. Mohammad Mujaheed Hassan from Universiti Putra Malaysia highlights that today’s youth are heavily burdened by financial commitments, including car instalments and credit card debts. A study involving respondents from Kuala Lumpur, Selangor, and Putrajaya revealed that a majority are committed to monthly car payments and have credit card commitments with at least two banks, contributing to their financial strain and inhibiting their ability to save or invest in property.

Interestingly, the study also pointed out that the younger generation prefers renting to buying, citing the distant locations of affordable homes from workplaces and additional costs such as taxes and maintenance fees. However, this choice comes with its own set of consequences, as renting does not contribute to asset accumulation like homeownership does.

Amidst these challenges, the Credit Counselling and Debt Management Agency has noted that a significant proportion of youth declared bankrupt in the country is due to credit card debts. The worrying trend suggests that the preference for lifestyle markers of success, like owning a car, and the burden of personal loans, including those for weddings, are preventing this demographic from securing their first homes.

Dr. Mohammad Mujaheed Hassan argues that while it is not wrong to prioritize car ownership or personal loans, the younger generation should give precedence to homeownership, considering its long-term value appreciation. The reluctance to buy homes, coupled with the consistent rise in residential property prices, might leave many without a home in their later years.

As the issue persists, the Housing Buyers Association (HBA) suggests that incentives under programs like the Home Ownership Campaign (HOC) should be tailored specifically for affordable properties priced below RM300,000, aligning government support with the actual housing needs of the population.

Furthermore, Dr. Azizul Azli from Universiti Teknologi Mara points out the stark disparity between income growth and property price increases, with salaries increasing by about 2% annually compared to property values rising by 6% or 8%. This gap makes it increasingly difficult for young professionals, especially fresh graduates, to keep up with the property market, even amidst post-COVID-19 price fluctuations.

To address this, Dr. Azizul urges the government to encourage developers to build more landed houses at lower prices and reduce construction costs by taking over the provision of amenities and offering subsidies for building materials. Additionally, reducing bureaucratic hurdles can also help in bringing down construction costs, thereby making housing more affordable for the younger generation.

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