The undersupply of affordable houses in Malaysia may worsen, given current income and demographic factors, according to Bank Negara Malaysia's 2016 Annual Report.
Bank Negara said since 2012, the increase in house prices in the country had outstripped the rise in income levels.
"Consequently, prevailing median house prices are beyond the reach of most Malaysians. This is primarily attributable to a gross mismatch between housing supply and demand, amid diverging expectations between households and developers.
"The issue has been compounded by the fact that the distribution of new housing supply has been concentrated in the higher-priced categories. The undersupply of housing is particularly acute in the affordable housing segment," Bank Negara said.
Looking ahead, Bank Negara said a carefully-designed strategy of policy intervention would be required for the housing market to ensure it is able to accommodate households of all income groups.
Bank Negara said government and private sector commitment is needed to meet demand for affordable houses in the country.
"The establishment of a central agency to consolidate the provision of affordable housing, as well as a central repository, is key.
"Additionally, reducing costs associated with the development of affordable housing through the implementation of cost-saving and productivity-enhancing technologies would increase the speed and scale of delivery of affordable housing projects, going forward," Bank Negara said.
On the demand side, Bank Negara said development of the rental market to bridge the affordability gap could relieve pressure on the government to build all the affordable housing needed.
This should be complemented by more innovative schemes to fund delivery of affordable houses, according to the central bank. — theedgemarkets.com
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