Houses in Malaysia are considered “seriously unaffordable” by international standards, a Bank Negara Malaysia official said.

According to the median multiple methodology developed by Demographia International and recommended by the World Bank, United Nations and Harvard University, a house is deemed affordable if it is priced not more than three times the annual household income, said BNM’s Financial Surveillance Department director Qaiser Iskandar Anwarudin.

“The affordability in Malaysia has deteriorated with the median multiple affordability (the ratio of house price to households’ annual income) rising to 4.8 times in 2016 from 3.9 times in 2012,” he told reporters during a briefing here today.

He said most Malaysians could not afford to buy newly-launched houses with the average price standing at RM417,262 while the maximum affordable house price nationwide was at RM282,000.

Qaiser said 73% of unsold properties in Malaysia were not affordable, with Johor recording the highest number of unsold houses followed by Selangor, Kuala Lumpur, Perak and Penang.

However, he said the property market situation in the country had improved with house prices going down at a moderate pace.

He said new launches were targeting affordable houses, compared to the situation in the past.

Meanwhile, he said as of June this year, the housing loan approval rate stood at 74.6% while in the segment for houses below RM300,000, the approval rate was around 70%.

He said almost half of the loans approved this year were for first-home buyers.

Qaiser said 80% of the housing loan rejection was because the house was priced more than three times the applicant’s annual income ratio.

Other reasons were that the applicants were already highly indebted, had a poor financial track record or had incomplete documents, he added.

Nevertheless, he said there were various initiatives to facilitate homeownership, especially for the B40 (lower-income) and M40 (middle-income) household segments, including schemes such as Skim Rumah Pertamaku and Skim Jaminan Kredit Perumahan; monthly repayment assistance such as Skim Perumahan Belia; and the rent-to-own scheme announced in the 2020 Budget.

He said BNM itself had launched the Fund for Affordable Homes early this year with a RM1 billion allocation for two years to facilitate homeownership for B40 households.

The fund, he said, had enabled more than 1,100 households to own a home with a total asset value of RM180 million.