We may be an aging society, but the fact is Malaysia’s population is made up of mainly the young. According to the Statistics Department, the largest age group in 2015 was those between the ages of 20 and 49 years.
About 14.375 million, or 47%, of the about 30 million Malaysians are from this age group. The second largest group, at 34% or 10.455 million, comprises those between the ages of 0 and 19 years. The retired and aged make up only an estimated 13.4% of the current population. The Malaysian population is, therefore, a youthful one.
With the young forming the bulk of our population, there is and will continue to be high demand for starter homes throughout the country now and in the near future. However, the price and design of many of the residential properties we have in the market today do not meet this market’s demand. The government has set the direction and its push for PR1MA and other schemes for first-time home buyers are in the right direction in support of housing for our youths.
According to Bank Negara’s “Annual Report 2015”, houses priced up to RM165,060 are considered affordable. The monthly median income for Malaysia is RM4,585 and the annual median income is RM55,020. Therefore, the median affordable house price is between RM165,060 and RM242,000. However, only 21% of new housing launches in the country were priced below RM250,000 in 2014. The report also showed data that pointed to an oversupply of higher-end properties priced above RM500,000.
The Bank Negara report noted that the current level of house-building in the affordable housing segment is not sufficient to meet demand and that a substantial increase in the supply of affordable housing is necessary.
It is also rather disturbing that Bank Negara finds that we are short of about 2.5 times the number of houses that are needed to be built annually. Bank Negara suggested that an estimated 202,571 new houses will be required annually between 2016 and 2020 to match the estimated growth in households during this period.
The report also said it is crucial that a holistic plan be implemented to provide sufficient quality housing that is affordable for the low and middle-income households.
A Khazanah Institute report on affordable housing noted that the median house price was 4.4 times the median annual household income in 2014, which points towards a “seriously unaffordable” housing market.
Based on these findings, the industry needs to correct the imbalance in its stock delivery practices. There is a mindset now to build premium homes but this mindset needs to change to deliver quality affordable housing for the youths instead.
Developers should face the reality that a youthful Malaysia cannot afford houses priced above RM300,000, he added.
There is a mismatch of provisions for the population as a majority of the current projects are aimed at an older population, or for those above 50 years. This clearly shows a need for more projects and developments that cater to those under the age of 50, particularly those between 20 and 49 years of age, who are starting families and looking for their own homes.
According to projections by the Statistics Department, the largest age group in the population will still be those between the ages of 20 and 49 years by the year 2040. About 44% of the total population then will be those between 20 and 49 years old, out of a total expected population exceeding 38 million.
This shows that between 2015 and 2040, there is only a slight decrease of 3% for this age group.
There is therefore an urgent need for more affordable housing. There should also be a focus on amenities and infrastructure to support this youthful population as they will be the ones leading and developing the country.
It is time that the property industry shifts its mindset to remain relevant in accordance with the country’s population’s growth and needs.
Mike Geh is senior partner at Raine & Horne International Zaki + Partners Sdn Bhd - The Edge Property