If you’re looking to buy a new home, or are just wondering if you can afford one, you’ll want to keep an eye on home prices in your area. So here’s what you need to know about average house prices in Malaysia, how to estimate the affordability of a home, and what to do if you’re struggling to afford your first home.
Find out about house prices in Malaysia
Residential property prices can vary depending on the region and state you live in. You can explore house prices all over Malaysia with the map below:
The price data was compiled from the 2020 NAPIC State Reports, which collected residential property price samples for thousands of locations across Malaysia. Then Google’s location services were used to determine the geographic coordinates of these areas.
What are the average house prices in Malaysia?
According to the National Property Information Center (NAPIC), the median price of homes in Malaysia in the first quarter of 2021 was RM300,000.
A median price means that half of the houses are cheaper, while the other half are more expensive. This is a better measure than taking the average price of all houses, as house prices that are significantly higher or lower could skew the measure.
Median home prices can also vary from state to state:
|Median house price (RM)|
Source: The quarterly update of residential prices Q1 2021
How affordable are Malaysian homes?
Are these house prices affordable? One way to define affordability is to compare income and house prices. The Khazanah Research Institute (KRI) uses the median multiple, which is a global standard used to estimate housing affordability.
median multiple = median real estate price / median annual gross household income
According to the Demographia International Housing Affordability report, a median multiple of 3.0 and below indicates affordable housing:
- 0 and less – affordable
- 1 to 4.0 – moderately unaffordable
- 1 to 5.0 – seriously unaffordable
- 1 and above – severely unaffordable
The median gross household income in Malaysia is RM 5,873 according to the latest official statistics in 2019, while the median house price is RM 300,000 in 2021. This puts its median multiple at 4.3, which falls under the “really unaffordable” category.
On top of that, wages fell in 2020 due to the pandemic, which would lead to lower household incomes. This would mean that Malaysia’s actual median multiple is higher than previously reported.
But the KRI points out that the median multiple does not measure the affordability of personal accommodation. Rather, the three-fold median multiples “signal that the market provides a distribution of housing and housing prices that are subject to minimal distortions, if any, and where supply is able to meet effective demand.” .
To assess the affordability of your personal home, the National House Buyers Association (HBA) suggests not to exceed one-third (or 33.33%) of your DSR on a home loan.
What can you do if you’re struggling to afford a house?
If you earn an average or lower income, it can be difficult to buy your first home. Saving on upfront costs (which can be around 15% of your home’s value, including a 10% down payment) can also be a challenge. Here are some things you can do to help.
a) Apply for affordable housing assistance
In Malaysia, there are several affordable housing programs that offer low- to medium-cost housing solutions, as well as funding to help cover the initial housing costs.
However, you may need to meet certain income or age requirements. In addition to this, some schemes operate through a voting system. For example, the PR1MA housing program selects successful applicants through a random voting process. This means that obtaining a home can take months or even years.
b) Look in more affordable areas
Accommodation can be expensive in busy areas like central KL. But if you can move around, you may be able to find more affordable options further afield.
c) Use your EPF savings
Finally, you might consider withdrawing your savings from the Employee Provident Fund (EPF) to buy a home, build a home or reduce your mortgage amount. However, that means having less for your retirement, and most Malaysians already don’t have enough savings for retirement.
In addition, the interest rates for home loans are relatively low. You can only incur about 3% interest per year. On the other hand, the EPF has historically generated returns of around 5 to 6% per year. To withdraw from EPF would be to forgo these returns on investment, so it is not a decision to be taken lightly.
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