Assessing Malaysia’s Effectiveness in Alleviating Home Buying Challenges for Young Malaysians

Abstract

This study analyses the current status of home ownership among young Malaysians and assesses the effectiveness of the scheme in improving housing affordability among young Malaysians. The study examines the target population, income profile, and loan interest rates to provide a comprehensive overview of the current status of home ownership among young Malaysians. The findings show that housing market conditions, especially among the B40 income group, have been deteriorating since 2016, with house prices growing faster than income growth. This has significantly reduced housing affordability, making it difficult for many to realize their dream of home ownership. The continued growth in money supply and volatility in the overnight policy rate have further exacerbated affordability. Although the MFHS has provided substantial support by offering loans with no down payment of up to 110%, rising house prices and interest rates have undermined its effectiveness. Policy recommendations include adopting a long-term housing policy framework that takes into account demographic and economic trends, establishing a strong monitoring and evaluation mechanism, and adopting flexible loan terms. It is also recommended to work with private sector stakeholders to improve housing accessibility and affordability through innovative financing solutions and increasing the supply of affordable housing.