Bank Negara: Claims of overbuilding are based on ‘inaccurate’ definition

KUALA LUMPUR: Bank Negara says claims by property developers that there is an overbuilding situation in the affordable housing market is based on the “inaccurate” definition of the segment.

The central bank said that houses in the price range of RM300,000 to RM500,000 are beyond what is affordable to households earning the median income in Malaysia.

An article by a financial newspaper published yesterday quoted a top official from Real Estate and Housing Developers’ Association as saying that the overbuilding of houses in that price range was “quite severe.”

“Based on international standards using the housing cost burden approach, the maximum price of an affordable home is estimated to be only RM282,000,” Bank Negara said.

This is based on the median household income of RM5,228 in 2016 as published in the household income and expenditure survey by the Department of Statistics.

The central bank said there remains a mismatch between the profiles of new housing supply and demand by households.

According to the fourth quarter 2017 data by the National Property Information Centre (Napic), only 39% of new housing launches were priced up to RM300,000 over the years of 2016-2017.

Bank Negara said this is insufficient to cater to the demand by 50% of households in Malaysia earning up to the median income.

“The Napic data also suggests that the issue of unsold affordable homes priced below RM300,000 is the least severe compared to other price ranges,” Bank Negara said.

As at the last quarter of 2017, unsold residential units priced below RM300,000 constituted the lowest share (20%) of total unsold residential properties under construction in Malaysia.

This compared with 35% in the RM300,000 to RM500,000 price range, and 45% in the above RM500,000 per unit market.