“Malaysia should introduce a vacancy tax, flexible mortgages, and better housing data to curb property overhang and improve home affordability for B40 and M40 groups, says Dr Najib Razali.”
Kuala Lumpur, 01st July 2025, 10.20am – Malaysia must implement bold structural reforms such as a vacancy tax and targeted home financing solutions to resolve its persistent property overhang and improve housing affordability for the B40 and M40 groups, said Universiti Teknologi Malaysia associate professor Dr Muhammad Najib Razali.
Despite ongoing residential development, the mismatch between supply and demand has left thousands of units vacant while many Malaysians remain priced out of homeownership.
“Malaysia’s price-to-income ratio was 9.78 in 2022—over three times the global benchmark of 3.0. That clearly shows homeownership remains out of reach for many households,” Najib said.
Vacancy Tax to Curb Speculation and Unlock Idle Supply
Najib proposed the introduction of a vacancy tax to discourage speculative holding of empty residential units by developers and investors.
“A vacancy tax would force price corrections and push developers to repurpose or release unsold inventory to match real market demand,” he said.
He pointed to successful models in Vancouver, Melbourne, and Singapore, where vacancy or holding taxes have proven effective in:
- Deterring speculative behaviour
- Matching housing supply with actual demand
- Increasing market liquidity by freeing up idle stock
Housing Must Be Both Affordable and Accessible
Beyond price, Najib emphasized the need for liveability and connectivity.
“Affordable housing should not be built in fringe areas without proper public transport links. This discourages buyers due to high commuting costs and poor access to amenities,” he said.
He called for integration of housing policy with urban mobility planning, especially extending public rail and bus routes into high-demand and developing zones.
Custom Mortgage Schemes and Inclusive Lending
To improve access for lower-income households, Najib urged the government to develop custom mortgage schemes that:
- Cap repayments as a percentage of household income
- Are backed by government guarantees or a dedicated housing finance fund
- Reduce lending risk and enable wider bank participation
“Banks must be incentivised to adopt more flexible credit assessments—beyond traditional credit scores. Rental history, utility bills, or employment consistency can serve as alternative criteria,” he added.
He cited international examples such as:
- Colombia’s Mi Casa Ya
- India’s Credit-Linked Subsidy Scheme
- Singapore’s HDB concessionary loans
These models, Najib said, could be adapted for Malaysia to expand access to housing finance without overexposing banks to risk.
Strengthening Public-Private Partnerships
Najib also recommended enhancing public-private partnerships (PPPs) by offering:
- Land incentives
- Infrastructure support
- Tax breaks for developers building homes priced below RM300,000
Such collaboration, he said, would ensure quality and affordability are not compromised and stimulate more private sector participation in the affordable housing space.
Data Reform Needed to Prevent Overbuilding
Citing poor data visibility as a contributor to the housing glut, Najib called for a revamp of the National Property Information Centre (NAPIC).
“The root of the overhang lies in the mismatch between what’s being built and what people can actually afford or want,” he explained.
He proposed upgrading NAPIC to:
- Provide real-time, granular data on income, demand, and housing preferences
- Leverage predictive analytics to guide future supply
- Support better planning at both federal and local levels
“Stronger data governance will help ensure housing supply is responsive, targeted, and equitable,” he said.
Converting Unsold Stock to Serve Real Needs
Finally, Najib suggested repurposing unsold or outdated properties into:
- Rental housing
- Co-living units
- Student accommodation
- Senior-friendly homes
“With the right incentives—such as refurbishment grants or tax relief—developers can convert stagnant stock into housing that meets evolving demographic demands,” he said.
