Housing becoming less affordable as wages fail to keep up with prices
PETALING JAYA: Malaysia’s housing affordability problem is mainly due to a gap caused by home prices rising faster than incomes, said Universiti Teknologi Malaysia Assoc Prof Dr Muhammad Najib Razali who specialises in property economics and finance.
He said the problem for most Malaysians is not just about getting a loan but whether they actually earn enough to comfortably afford homes.
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“The strongest relationship remains between house prices and household income. When incomes rise together with property prices, affordability remains stable.
“But when prices outpace wage growth, affordability deteriorates directly,” he said.
Muhammad Najib said this forces many households to take on bigger loans, stretch repayments over longer periods, move further away from city centres, accept smaller homes or rely on family support.
He said cheaper interest rates and easier loans could help but they do not solve the real problem.
“Lower interest rates and easier credit may improve loan eligibility but they do not make a RM700,000 home genuinely affordable for a household that can realistically sustain only a RM400,000 to RM500,000 mortgage,” he said.
He said government schemes such as loan guarantees, first-homebuyer incentives and affordable housing programmes help people get into the system but do not fix the price gap if cost of homes keep rising faster than salaries.
Data from the Property Market Report 2025 shows that the national average house price is RM502,922 while Kuala Lumpur averages RM819,848 and Selangor RM567,505.
At the same time, unsold completed homes have risen to 30,471 units, with another 72,384 still under construction, suggesting that some homes are too expensive for the market to fully absorb.
He said this reflects a wider imbalance, where developers are building higher-priced homes while many buyers are stuck in lower and middle-income brackets.
“Ultimately, Malaysia’s affordability challenge is not driven by a single factor but by the interaction between pricing, income, financing, land cost and market structure,” he said.
He added that interest rates only help at the edges by lowering monthly payments but cannot fix a situation where house prices are simply too high compared with what most households earn.
“If these factors are ranked, the primary issue remains pricing relative to income. Financing exposes the gap while income growth determines how severe it becomes over time,” he said.
