Abstract

Housing affordability is a long-held issue in Malaysia, and housing policies have been implemented for low-income households over the years. However, there is a contradiction that housing affordability of low-income households has not been met, while the bulk of affordable housing is still vacant. In 2019, Malaysia enacted the National Affordable Housing Policy (DRMM) which was intended to improve housing affordability for low-income groups. This paper aims to answer why Malaysia’s long-term implementation of affordable housing policies cannot guarantee housing affordability, and whether the DRMM can effectively improve housing affordability as expected, by comparing the empirical factors of housing affordability. A literature review and a comparative analysis are adopted in the research. The paper concludes that low household income, high land price, construction cost and compliance cost, mismatch of supply and demand in terms of quantity, the instability of the national economy, low home financing ability, and incomprehensive housing planning have caused low housing affordability of low-income groups in Malaysia. The DRMM as anticipated can improve housing affordability by supplying affordable housing more precisely, lowering housing costs, and improving home financing ability. However, the exclusion of household income and economic factors may cause the ineffectiveness of the DRMM in improving housing affordability for low-income households.

Highlights

  • In 2019, Malaysia can be defined as a developing country comprised of 32.6 million people, 7.3 million households, and a total supply of 6.02 million homes, with its average household size decreasing to 3.9 persons from 4.1 persons in 2016 [1]

  • Strategies of land preparation for affordable housing and a reduction in compliance costs and construction costs are correlated with the factor of high housing costs that influences housing affordability

  • Household income and economic factors are excluded in the DRMM

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Summary

Introduction

In 2019, Malaysia can be defined as a developing country comprised of 32.6 million people, 7.3 million households, and a total supply of 6.02 million homes, with its average household size decreasing to 3.9 persons from 4.1 persons in 2016 [1]. Population growth, and urban migration have created an increasing demand for affordable housing. The term “affordable housing” is often used to describe a housing unit that is affordable for those whose income is lower than the median household income in a place. The term “housing affordability” is often used to determine whether housing is affordable for households. Housing Program (SPNB), 210,529 units completed, 85% of the target. 95,800 units completed, 91.2% of the target Rent-to-Own financing scheme Home Ownership Campaign in 2019

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