House price and affordability in housing in Malaysia.

Abstract

Residential property market in Malaysia has experienced significant price expansion over the past fifteen years with prices, at several states, expanded at higher rates. As economic theory has explained, house price movements is inherent with the regional economics and regional demographics such as income, cost of capital, stock prices and population change. However, sudden price change could affect home ownership to some extent. Under any circumstances, the need for housing as a basic necessity persist. This article intend to analyse house price movements with regard affordability and availability and to some extent the possibility of wealth creation of house ownership and its influence on consumption. Discussion will also be made on the effect of the recent Budget 2008 on home ownerships. The article will address issues pertaining to affordability level among the sampled states, availability of housing for the lower income earners and wealth created through home ownership. Since the housing industry is an important sector to the Malaysian economy, the health of the housing market is of paramount importance and directly correlated to ability to own and thus, the purchasing power of the public. Pronounced price fluctuation affect ownership thus affordability and availability are much reduced. Sustained price movement can ensure sustainable house ownerships and support the housing market thus affordability level is favourable.