Can Malaysia’s national affordable housing policy guarantee housing affordability of low-income households?

Abstract

Housing affordability is a long-held issue in Malaysia, and housing policies have been implemented for low-income households over the years. However, there is a contradiction that housing affordability of low-income households has not been met, while the bulk of affordable housing is still vacant. In 2019, Malaysia enacted the National Affordable Housing Policy (DRMM) which was intended to improve housing affordability for low-income groups. This paper aims to answer why Malaysia’s long-term implementation of affordable housing policies cannot guarantee housing affordability, and whether the DRMM can effectively improve housing affordability as expected, by comparing the empirical factors of housing affordability. A literature review and a comparative analysis are adopted in the research. The paper concludes that low household income, high land price, construction cost and compliance cost, mismatch of supply and demand in terms of quantity, the instability of the national economy, low home financing ability, and incomprehensive housing planning have caused low housing affordability of low-income groups in Malaysia. The DRMM as anticipated can improve housing affordability by supplying affordable housing more precisely, lowering housing costs, and improving home financing ability. However, the exclusion of household income and economic factors may cause the ineffectiveness of the DRMM in improving housing affordability for low-income households.