Affordability of Potential First Time Home Buyers in Urban Areas, Malaysia

AFFORDABILITY OF POTENTIAL FIRST TIME HOME BUYERS IN URBAN AREAS, MALAYSIA

 Dr. Ainoriza Mohd Aini

Assoc. Prof. Dr. Wan Nor Azriyati Wan Abd Aziz

Assoc. Dr. Noor Rosly Hanif

Dr. Zairul Nisham Musa

Built Environment, University of Malaya

Kuala Lumpur

ABSTRACT

The concern of housing affordability in urban areas gained substantial momentum in Malaysia as middle income (M40) households began experiencing difficulty in accessing home ownership with special attention to the internal determinants including socio-demographic and buyer’s financing capacity. Semi-structured surveys was conducted on non-home-owners in three cities; Kuala Lumpur, Petaling Jaya and Shah Alam. Focusing on the middle income (M40) household category, the study delves into their financial position and housing aspirations. Using their actual incomes and expenses, the Housing Income Index for the first time home buyers was constructed to gauge the affordable house price and mortgage-toincome ratio. The findings demonstrated that the inability to access home ownership is mainly explained by inadequate income, high non-property monthly expenses aggravated by the rapid rising house price. Empirically, the study found that down payment constraint is another major impediment to home access among these urbanites. The study concludes by considering some potential implications to policy makers, affordable housing provider and financial institutions.

Keywords: Housing, affordability, middle income, home ownership, mortgage-to-income ratio