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A Micro-Level View of Housing Affordability in Malaysia Using an Age Cohort-housing Type Analysis

Author

Listed:
  • Gary John Rangel

    (Department of Finance, School of Management, Universiti Sains Malaysia)

  • Jason Wei Jian Ng

    (Department of Econometrics and Business Statistics, School of Business and Global Asia in the 21st Century (GA21) Research Platform, Monash University Malaysia)

  • Thangarajah @ M. Thiyagarajan Murugasu

    (Department of Econometrics and Business Statistics, School of Business, Monash University Malaysia)

  • Wai Ching Poon

    (Department of Economics, School of Business and Global Asia in the 21st Century (GA21) Research Platform, Monash University Malaysia)

Abstract

Housing affordability has been an important issue for both developed and developing countries. Prior literature has used the price-income ratio as the main standard to assess housing affordability with the median disposable household income of the sample population commonly used. As such, conclusions drawn from macro-level analyses lack practical policy considerations. This paper attempts to address the problem in greater detail by considering age cohorts, income percentiles and different house types. The results show that for those aged 20-24 and 60-64, housing is severely unaffordable across all house types, except for the 75th income percentile group. The most expensive – semi-detached and detached housing types – remain unaffordable to all income and age groups, except for the 75th income percentile group aged 30 and above. Terrace and high rise housing types are the most affordable across each income percentile. Based on the results, we extend the housing affordability literature through recommendation of several policy measures that may ameliorate the affordability conundrum.

Suggested Citation

  • Gary John Rangel & Jason Wei Jian Ng & Thangarajah @ M. Thiyagarajan Murugasu & Wai Ching Poon, 2019. "A Micro-Level View of Housing Affordability in Malaysia Using an Age Cohort-housing Type Analysis," Malaysian Journal of Economic Studies, Faculty of Business and Economics, University of Malaya & Malaysian Economic Association, vol. 56(1), pages 1-22, June.
    • Handle: RePEc:mjr:journl:v:56:y:2019:i:1:p:1-22
    DOI: 10.22452/MJES.vol56no1.1
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    More about this item

    Keywords

    Age cohort; cubic spline; housing affordability; housing types; information asymmetry; Malaysia;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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