KUALA LUMPUR (Nov 14): Ipsos Malaysia is calling for a review of the 30% housing expense-to-income rule in assessing housing affordability, saying the current rule that deems a home unaffordable if households spend more than 30% of their income on it, is both “outdated and arbitrary”, which leads to suboptimal policies.
The current rule is also not based on the needs of Malaysian households, it said in a statement. According to its recent study conducted on Selangor households, the more accurate threshold is much lower — at 23.5%.
The study, which was carried out in partnership with researchers from Sunway University, Monash University and Durham University, shows that more households will be seen as “house poor” if based on this new threshold.“The study of households in Selangor has shown that 23.5% is the more accurate expense-to-income ratio. The range of this indicator for various scenarios falls between 20.6% and 28.7%, much lower than the conventional 30%. Implications of revising the indicator from the current 30% to 23.5% are likely to lead to many more households being classified as ‘house-poor’ — those that perceive their housing costs to be a financial burden,” Ipsos Malaysia said in a statement.”This study confirms that the 30% threshold is outdated and does not serve the needs of the data-driven policymaking process in Malaysia… Through this study, there is an opportunity for the government of Malaysia to incorporate monitoring and tracking of housing affordability for Malaysian households in the Central Database Hub (Padu) initiative, to enhance its policy initiatives and government assistance programmes,” it added.
There is a need for local data-driven and a more accurate indicator that would be relevant and useful for Malaysian policymakers and observers, it said.”Over time, under the stewardship of the Department of Statistics of Malaysia, the government can also look to possess longitudinal data that measures the well-being of citizens and their housing affordability situation, to inform and refine its policymaking processes and set new examples of best practices for the region,” it added.
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Source: EdgeProp.my
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