KUALA LUMPUR, Feb 14 (Reuters) - Unsold residential properties in Malaysia rose to their highest in a decade last year as lofty prices and a lack of affordable housing dampened purchases, the country’s central bank said.
Bank Negara Malaysia said in a report on Wednesday that a supply-demand mismatch and slower income growth had led to a housing affordability issue in Malaysia.
The acute supply-demand mismatch brought the level of total unsold residential properties to a decade-high 146,497 units as of the second quarter of 2017, an increase from 130,690 units in the first quarter, the report said.
During the second quarter of 2017, almost 82 percent of unsold units were priced above 250,000 ringgit ($63,873), it added.
House prices have risen more quickly than salaries in Malaysia, especially during 2012-2014 when prices grew 26.5 percent, more than double the 12.4 percent increase in household income levels.
The central bank said that from 2007 to 2016, house prices grew 9.8 percent while household income only rose 8.3 percent.
Additionally, the report noted that new housing supply had been skewed towards the higher-end property segment since 2012.
That, coupled with poorer financial literacy among a majority of Malaysian households, and a cultural preference towards home-ownership instead of renting, contributed to the high demand for house purchases, the report said.
The maximum affordable house price in Malaysia is estimated to be 282,000 ringgit, the report said. However, the actual median house price was 313,000 ringgit, beyond the means of many households, where the median national household income is only 5,228 ringgit, it added.
The central bank raised a few policy propositions, including establishing a single entity to spearhead affordable housing initiatives, setting up an integrated database to assist matching demand and supply, and reducing costs. To manage demand, it suggested rehabilitating the balance sheet of households and improving the rental market.
$1 = 3.9140 ringgit Reporting by Liz Lee; Editing by Jacqueline Wong