KUALA LUMPUR: The problem of affordable housing needs to be tackled using holistic long-term policy measures, especially in the quality of life development perspective.
Malaysian Rating Corporation Bhd (MARC) said a solution to the problem would require, among other things, a rebalancing of the supply-demand dynamics of the housing market and effective implementation of medium- and long-term development measures to accelerate household income growth.
"Considering the complexity of the housing affordability issue, loosening mortgage lending requirements alone will be insufficient to solve the problem. More importantly, it is not a long-term policy measure and should not be treated as one,” it said in its Economic Report titled 'Affordable Housing Woes: Holistic Long-Term Policies Necessary'.
It said house prices have escalated in recent years, with prices surged by an average of 9.3 per cent per annum over the 2010 to 2016 period, compared to only 3.6 per cent per annum over the 2002 to 2008 period.
"It is noteworthy that since 2012, the growth pace of house prices has outstripped that of income levels. This is due in part to the fact that the supply of new housing has increasingly become concentrated in the higher-priced categories,” it said.
MARC said with the median annual household income of Malaysians standing at around RM63,000, many find the bulk of the newly launched homes unaffordable and it does not help even when the growth pace of Malaysia’s median monthly household income on a compounded annual growth rate basis has moderated in recent years.
"Given the situation, MARC feels that loosening mortgage lending to boost home ownership is not the way to go.
"It is important to assess the potential adverse consequences before proposals aimed at encouraging home ownership through easy financing are considered,” it said.