The National House Buyers Association (HBA) has called for a clearer definition of “affordable housing” in Malaysia, stressing that homes priced as high as RM500,000 should not be considered affordable. Datuk Chang Kim Loong, the HBA’s Honorary Secretary-General, stated that true affordable housing must address the needs of households earning below the median income level, as outlined by a government-recognized affordability index. This news was reported in Business Times.

“A home is more than just a physical asset; it provides long-term financial security. The HBA urges the government to prioritize the people’s housing needs over developers’ interests,” Chang said. He defined affordable housing by three criteria: price range, suitable living space, and accessible location.

• Price Range: Housing should be priced between RM150,000 and RM300,000, distinct from low- and medium-cost housing priced below RM100,000, like People’s Housing Projects (PPR).
• Size and Suitability: A minimum size of 800 sq ft, with at least two bedrooms, ensures these homes are suitable for families.
• Location and Accessibility: Affordable housing should be in areas with reliable public transport links, such as LRT or KTM, and near essential amenities like schools and hospitals.

The HBA praised the government’s 2025 Budget proposals for the housing sector, noting that effective implementation could significantly increase the supply of affordable homes, particularly as Malaysians struggle with rising costs and economic pressures. Chang added that a “Housing Index” would also help standardize affordable housing definitions across states, accommodating varied local economic conditions and making homes truly affordable based on regional incomes.

Establishing a national affordable housing trust

In response to ongoing mismatches between supply and demand, the Real Estate and Housing Developers’ Association (Rehda) recently proposed creating a national affordable housing trust. Datuk Ho Hon Sang, President of Rehda, explained that the trust would focus on building affordable homes in high-demand areas to avoid surplus stock in less-demanding regions. Ho highlighted data from the National Property Information Centre that 28.6% of unsold homes in Q1 2024 were priced below RM300,000, underscoring a location-based mismatch in housing supply.

“Affordability must be aligned with specific demand areas, not a one-size-fits-all approach,” Ho said. He proposed that representatives from the Housing and Local Government Ministry, state authorities, and Rehda form a committee to evaluate where affordable housing is most needed. Developers would contribute a percentage of their gross development value to fund the trust.

Rehda also suggested developers work with banks to offer subsidized loans for affordable housing and urged the government to provide incentives, like discounts on premium charges, development fees, and Improvement Service Funds, to reduce the financial burden on home buyers.

Regional and state variations for affordable housing

Samuel Tan, CEO of Olive Tree Property Consultants, noted that the definition of “affordable housing” should vary by state, given the unique characteristics of each region. “A RM500,000 home may be affordable in the Klang Valley but would be considered a luxury property in states like Kelantan or Perlis,” Tan explained. Localized standards, he argued, would better reflect regional economic conditions and affordability.

Tan also emphasized that price alone should not define affordable housing. “The number of bedrooms, bathrooms, and proximity to public transport and amenities must be considered to provide a livable and functional space for families,” he said.

Program Residensi Rakyat (PRR) raises concerns

The HBA’s Chang expressed concerns regarding Program Residensi Rakyat (PRR), a new initiative included in the 2025 Budget by the Ministry of Housing and Local Government. The budget allocates RM900 million for 48 PRR projects, aiming to house around 17,500 residents by the end of 2025. However, Chang warned that the initiative could impose financial strains on the government, with PRR units projected to cost RM300,000 to build but sold at just RM60,000 each.

Chang pointed out that the current social housing model, PPR, is a rental arrangement meant to help lower-income groups save toward buying their own homes. He suggested that the government follow Johor’s Rumah Iskandar model, which offers a rent-to-own option, allowing qualified tenants to rent initially and buy later.

A sustainable path forward

By setting clear, regional standards for affordable housing, Malaysia can address both the shortfall in truly affordable homes and the regional disparities in housing demand. The HBA and Rehda’s proposals, combined with government initiatives, highlight the importance of a balanced, regional approach to make affordable housing a realistic and sustainable goal for the nation.