Experts urge Malaysia to revisit the 30% housing expense rule, proposing a more accurate 23.5% benchmark for better policy initiatives and affordability monitoring.
KUALA LUMPUR, 21st Nov 2023 – Housing experts are pressing Putrajaya to reconsider the long-standing 30% housing expense-to-income rule, asserting that it no longer accurately gauges housing affordability in Malaysia. Researchers from Durham University, Monash University, and Sunway University argue that this guideline, rooted in the Great Depression, lacks alignment with the current needs of Malaysian households, prompting the call for a more precise and locally relevant indicator.
In collaboration with Ipsos Malaysia, the three universities conducted a study focused on housing affordability, aiming to provide data-driven insights for policymakers. The study challenges the conventional 30% threshold, proposing a more accurate expense-to-income ratio of 23.5%, as per Selangor household research. Various scenarios within the study suggest ratios ranging from 20.6% to 28.7%, notably lower than the traditional benchmark.
A revision to the indicator, reducing it from 30% to 23.5%, is anticipated to categorize more households as ‘house-poor,’ indicating a perception of housing costs as a financial burden. The researchers emphasize that this adjustment is crucial for a data-driven policy-making process in Malaysia, offering more nuanced insights into housing affordability.
The study’s outcomes are expected to contribute to the ongoing discourse on measuring housing affordability, providing valuable insights into how households perceive affordability. The researchers hope that the findings will empower the government to refine policy initiatives and assistance programs, with the potential to utilize the Central Database Hub initiative for tracking and monitoring housing affordability over time.
“As the Department of Statistics of Malaysia (DOSM) oversees the Central Database Hub, the government can leverage longitudinal data to gauge citizen well-being and housing affordability, informing policy-making processes and setting new benchmarks for the region,” they concluded.