Housing affordability is commonly evaluated by how comfortably households can cover their home-related expenses without financial strain. One straightforward metric is the ratio of a typical house price to the average annual income—essentially, dividing the national median house price by the median household income. A lower ratio implies that housing is within reach for the average buyer.
However, rather than relying solely on averages—which can be skewed by extremely high prices and incomes—using median values offers a more accurate picture of affordability for the majority. This “median multiple” is a critical benchmark. According to Demographia International, in a well-functioning market, middle-income families should be able to finance a home if its price is less than three times their annual income. When this ratio exceeds three, housing quickly transitions into the realm of being moderately to severely unaffordable.
Historically, data from countries like Australia, New Zealand, the United Kingdom, Ireland, Canada, and the United States showed that until the 1980s or 1990s, median multiples generally stayed between 2.0 and 3.0. Yet, since the early 2000s, these ratios have surged dramatically—Australia’s reaching as high as 9.7, while Canada and New Zealand hover around 8.6 and 8.2, respectively. In contrast, recent analyses indicate that Malaysia’s median price-to-income ratio has been consistently above 4.0 since 2002, pointing to a housing market that has been “seriously unaffordable” for nearly two decades.
Data limitations mean that median house prices in Malaysia are reliably tracked only from 2010 onward, and household income figures only date back to 1995. Despite these constraints, it’s often assumed that before 2000 the ratio was around 3.0 or even lower—thus, the international benchmark of 3.0 has long been seen as a measure of affordability.
In response, Malaysian housing policies have emphasized the development of affordable and social housing—typically targeting units priced at RM300,000 or less. Initiatives such as the Residensi MADANI aim to help low-income families secure quality homes. Yet, forcing the construction of houses below market value raises important questions. Not only does it challenge the feasibility of building sufficiently low-cost housing, but it also disrupts the free-market dynamics by relying on cross-subsidization from higher-priced developments.
Further analysis, including statistical tests comparing mean and median affordability measures, suggests that using average figures can be a reliable proxy when median data is sparse. Nevertheless, the persistent elevation of the price-to-income ratio—from as low as 3.0 in previous decades to much higher levels today—signals that simply sticking to the 3.0 benchmark may not be realistic for Malaysia.
Moreover, high land costs in urban centers are a significant contributor to unaffordability. Until land becomes available at more reasonable prices, or until innovative solutions—like unlocking underutilized government land—are implemented, housing prices are unlikely to become more affordable. Recent government reviews of development plans, such as those for Bandar Malaysia, illustrate a potential pathway forward by balancing market forces and ensuring public-private collaboration.
Ultimately, to truly capture housing affordability, it is essential to look beyond a simple ratio. A comprehensive assessment should consider spending habits, the overall cost of living, and even the expenses associated with housing construction, preferably at a local or city level where market conditions are most relevant.
Disclaimer: This content is provided for informational purposes only. It is not intended to serve as financial, investment, real estate, or legal advice. Always consult a professional for personalized guidance.
US 20847 
BR 16495 
GB 11866 
CA 9170 
AU 8635 
IE 4793 
IN 3649 
NZ 3463 
