Most Malaysians priced out of major city homes
PETALING JAYA: Owning a typical urban home in Malaysia is increasingly drifting beyond the reach of ordinary earners, with households now needing about RM10,000 to RM15,000 a month to sustain ownership in major cities, according to a property economist.
Universiti Teknologi Malaysia Assoc Prof Dr Muhammad Najib Razali, who specialises in property economics and finance, said the gap between incomes and house prices has widened to a point where even households that qualify for loans are often not financially comfortable once broader living costs are factored in.
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“Under current lending conditions, interest rates and household income levels, most Malaysians today can realistically afford only homes priced well below what is commonly available in major urban centres,” he said.
He said banks typically consider mortgage repayments sustainable only when they do not exceed 25% to 30% of gross household income for a 90% loan, repaid over 35 years, at an interest rate of around 4.5%.
He added that under this framework, a household earning RM3,000 a month can only afford homes priced roughly between RM175,000 and RM210,000, effectively limiting access to low-cost or heavily subsidised housing.
“Even at RM5,000 a month, buyers are generally confined to homes in the RM300,000 to RM350,000 range, still within the affordable housing segment rather than the open urban market.
“The pressure becomes more visible when compared with national income data. Malaysia’s median household income stands at about RM7,017 while the urban median is around RM8,139,” he said.
Muhammad Najib said based on calculations, this places a typical household in a position to safely sustain homes priced between RM400,000 and RM570,000, depending on debt levels and living expenses.
However, recent market data underscores a growing disconnect. The national average house price has climbed to RM502,922, while Kuala Lumpur averages RM819,848 and Selangor RM567,505, respectively.
Muhammad Najib said this explains why many households appear “qualified on paper” but remain financially stretched in practices.
“Even households earning around RM7,000 to RM8,000 monthly may still qualify for financing but ownership often becomes financially stretched once childcare, transport, maintenance fees, insurance, utilities and other daily expenses are factored in.
“At a higher income level, households earning around RM10,000 a month are better positioned, with capacity to sustain homes priced between RM580,000 and RM700,000, making entry-level urban ownership more realistic,” he added.
He said in major cities where prices exceed RM800,000, buyers typically require combined household incomes of RM13,000 to RM16,000 or more to avoid financial strain.
Muhammad Najib said this is reshaping Malaysia’s housing market into increasingly distinct income tiers.
“Lower-income groups remain dependent on public and affordable housing schemes while middleincome households increasingly face trade-offs between location, size and long-term debt commitments.
“At the same time, upper-middle and high-income households, often dual-income professionals or families with financial support, dominate the open urban market,” he said.
He said the real issue is no longer just whether people can get a loan but whether their salaries are rising fast enough to keep up with rising house prices over time.
“Malaysia’s economy grew 5.2% in 2025, and borrowing conditions remain supportive with the Overnight Policy Rate at 2.75%.
“Property sales are also still strong, with more than 400,000 transactions recorded, showing that demand remains high even as affordability is getting tighter.
“The national average house price of RM502,922 already exceeds what a median Malaysian household can safely afford under normal financing conditions,” he said.
