Malaysian house hunters priced out of market

Kuala Lumpur: Further out of reach than it may appear Photo: Andy_Mitchell_UK

Much has been made of the plight of first-time buyers in the UK, but in Malaysia, it is just as difficult for house hunters to get a foot on the property ladder.

Malaysia's property prices rose 5.41 per cent in the third quarter of 2015, according to the Ministry of Finance's valuations department, to an average of MYR312,050 - the equivalent of US$72,519. This is actually a slowdown compared to previous months, with the Central Bank of Malaysia's house price infex decreasing to 5.4 per cent in the third quarter of 2015 compared to 5.9 per cent in the second quarter. (The index reached a peak of 44.5 in the first quarter of 2000 and fell to a record low of -39.2 in the third quarter of 1998.)

Even with economy slowing and price growth moderating, though, in addition to a wider political scandal and weaker currency, property buyers are still struggling to afford homes.

High costs in urban centres such as Kuala Lumpur have priced out buyers, forcing them to consider looking outside of the city.

"It's very difficult to find a house within our budget so we have no choice, we need to find a house out of town," one bank employee tells Al Jazeera. They have an average budget of $19,000, but the average professional wage in the city is $10,000, leaving them even further from a rung on the property ladder.

The difficulties faced by buyers remain despite a small property tax being removed by the government recently. Indeed, prices fell 15 per cent in 2015 and will fall again in 2016, say experts, but 50 per cent of mortgage applications are still being rejected, meaning few can afford their own home.

Developers are now beginning to build projects just outside of cities such as Kuala Lumpur to serve this niche in the market, but they will take time to complete construction. Until then, the frustrated property search continues.