What is “affordable housing?”
According to research by the Khazanah Research Institute (KRI), the threshold for affordable housing is one where the cost of the house is three times the median income, called the Median Multiple. This calculation defines that if a household can finance the house with less than three times its annual median household income, the house is considered affordable. Anything higher than that, it’s considered unaffordable.
According to the Department of Statistics Malaysia (DOSM), the current median income is at RM5,228 as of 2016. Using the Median Multiple calculation, Malaysia’s overall affordable housing price is at RM188,208. In 2016, houses in Malaysia remained seriously unaffordable by international standards with a median multiple of 5.0 (BNM Feb 2018). Bank Negara said the maximum affordable house price in Malaysia is estimated to be RM282,000. However, actual median house price was RM313,000, beyond the means of many households, where the median national household income is only RM5,228.
Tomorrow we see how BNM tackle this affordable housing issue.