SINGAPORE (Oct 1): Last week, we discussed some of the major issues with regard to the current state of housing in Malaysia. To briefly recap, the rising number of unsold houses across the nation indicates that there is ample supply in the market. However, many are still unable to own a home. This is due primarily to the gap between house prices and income levels.

We showed an estimated cost breakdown for an average-priced home. It underscores the limits to which costs can be lowered — for quality housing of a decent size, at a reasonable location with connectivity and facilities that will create equity for owners in the long run. The poor performance of the Perumahan Rakyat 1Malaysia (PR1MA) housing scheme would testify to this.

We also highlighted the risks of default and foreclosure if banks were forced to loosen lending requirements, which could have serious ramifications on the banking sector and the economy as a whole. Keep in mind that the average Malaysian household is already heavily indebted and has little ability to take on more loans.

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