KUALA LUMPUR: Malaysian house prices remain seriously unaffordable relative to income, said Bank Negara Malaysia, blaming it on a mismatch between demand and supply of residential property.
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The central bank in its Financial Stability Review (Second Half 2019) report however said risks of a sharp correction in house prices will continue to be mitigated by a firm demand for housing, particularly for properties priced below RM500,000.
For the first nine months of 2019, these properties accounted for 83% of total transactions.
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BNM said Malaysian house prices continued to grow moderately in the third quarter of 2019, on the back of steady demand for affordable high-rise properties.
Housing market activity remained strong after a better performance in the first half of 2019 as a result of various initiatives introduced during the year by both the government and private sector to support home ownership, including stamp duty exemptions as well as developers’ discounts and rebates.
For the year as a whole, housing market transactions are expected to register stronger positive growth in volume terms.
Additionally, income growth, the formation of new households, as well as the various initiatives to reduce the cost of home ownership, have lent support to housing demand in 2019.
Demand for affordable housing units continued to outstrip supply by a wide margin, indicating room for further adjustments in prices, particularly for new housing stock, BNM said.
Supply rebalancing, on the other hand, has been underwhelming.
The average volume of newly-launched residential properties priced below RM300,000 has declined in recent quarters despite strong demand from households.
BNM said latest data also indicates a declining share of new launches in this property segment, reversing earlier trends.
It said if this persists, future risks of price adjustments could increase again due to affordability constraints. – FMT