Ipsos Malaysia is urging Putrajaya to reconsider the existing 30% housing expense-to-income rule, labeling it as “outdated and arbitrary” and emphasising its adverse impact on policy effectiveness.
The current standard, deeming a home unaffordable if households spend over 30% of their income on it, lacks alignment with Malaysian household needs, Ipsos Malaysia asserted in a statement.
A recent study conducted on Selangor households in collaboration with researchers from Sunway University, Monash University, and Durham University suggests a more accurate threshold at 23.5%.
The study reveals that using the new threshold would categorise more households as “house poor.”
Ipsos Malaysia stated, “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.”
Highlighting the opportunity for improvement, Ipsos Malaysia added, “This study confirms that the 30% threshold is outdated and does not serve the needs of the data-driven policymaking process in Malaysia…”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.”
The statement emphasised the necessity for locally derived, data-driven, and accurate indicators for Malaysian policymakers and observers.
Ipsos Malaysia suggested, “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.”