Houses in Malaysia are simply unaffordable for many Malaysians.  There is a serious mismatch between incomes and house prices. According to Khazanah Research Institute and Bank Negara Malaysia, the signal of a well-functioning affordable home market is when the median price for the whole housing market is three times the gross annual household income. Bank Negara would add that the monthly payment for the house should not be more than 30% of the income. Payments of more than 30% would be considered as an overburden for the consumer.Based on the above criteria, Bank Negara would suggest that an affordable home in Malaysia based on the monthly median income of RM4, 585 and the annual median income of RM 55,020 is between RM 165,000 and RM 242,000. Yet what is the current price of houses?

Overall in Malaysia, houses prices are 4.4 times the median income. Further, zeroing in on the states, house prices in Kuala Lumpur is 5.4 times, in Pulau Pinang is 5.2 times, in Johor is 4.2 times and in Selangor is 4.0 times. Further while according to Bank Negara the affordable home is at RM 242,000, in actual fact the average price of houses in Kuala Lumpur is RM 773,000,while in Selangor it is RM 497,000 at the third quarter of 2018. To put it simply, houses in Malaysia are simply not affordable to consumers.The efforts, through policy and programs then, should be to reduce the price of houses to the affordable range of about RM 250,000 to RM 300,000. Yet, in 2016 only 25% of new housing launches were priced below RM 250,000. There was a gross oversupply of houses above RM 500,000 and under-supply of houses below RM 250,000. No wonder the mismatch between demand and supply.

It clearly appears that housing developers are building expensive houses to make huge profits not for Malaysians but for foreigners who could easily afford the high prices. They appear very confident that the government would support their interests instead of forcing them to bring prices down to what consumers can afford.That is why FOMCA strongly opposes the sale of property of property of RM 600,000 to foreigners. This is a price that is easily affordable to some foreign nations.  For Singaporeans, for example this is about Singapore $ 200,000, cheaper even then their own social houses built by the Housing Development Board.  Hong Kong investors, flushed with cash, facing some internal turmoil, are also looking of investments in Malaysia. The winners are the property developers; the losers are the rakyat.

With the ability to sell to foreigners supported by the government, the housing developers can now neglect the local consumers and build and market for wealthy foreigners.  They get to boost their excessive profits through unaffordable housing.It is really sad that the Government has chosen to enable housing developers to make excessive profits while Malaysian consumers cannot afford to purchase their own homes.If we are sincerely concerned about enabling Malaysians to own their own homes, FOMCA urges the government to cancel the policy that property of RM 600,000 and can be sold to foreigners.  This is the government’s responsibility to the rakyat.