By Ahmad Nizam Che Kasim

The dream of owning a home remains central to the Malaysian imagination. Yet in 2025, it is also one of the greatest economic and social challenges the country faces.

Affordable housing has long been a barometer of stability, and while Malaysia has made strides in supply, persistent cracks in affordability threaten to widen unless bold solutions take hold.

The affordable housing situation in Malaysia in 2025 can be summarised with key statistics and insights:

In Q1 2025 alone, 12,498 new residential units were launched, and more than 65 per cent were priced under RM500,000. Of these, 22.5 per cent fell below RM300,000, while 42.8 per cent ranged from RM300,001 to RM500,000.

Johor led the way with 3,194 units, followed by Selangor (2,129) and Negeri Sembilan (1,838). Clearly, the supply of “affordable” homes is expanding in Malaysia’s growth corridors.

Government ambition has been equally robust. The target is 500,000 affordable homes by the end of 2025.

Already, 180,000 units have been completed and another 235,000 are under construction. Looking further, the national plan envisions one million affordable units between 2026 and 2035.

Initiatives such as stamp duty exemptions for first-time buyers, the Residensi Rakyat programme, and improved loan access schemes reinforce this push. And yet, the narrative of progress is tempered by reality.

Surveys show that only 24.1 to 28.7 per cent of Malaysian households find current housing prices truly acceptable.

Demand for affordable homes stands at 48 per cent, but actual supply lags at just 28 per cent. Worse, too many projects face delays or even abandonment – leaving families in limbo and confidence in the system shaken.

Deeper structural problem

The deeper structural problem lies in the affordability ratio: the gap between income and house prices.

In cities like Kuala Lumpur, the ratio remains far above international benchmarks of affordability, making home-ownership an elusive goal for many middle-income earners.

Financing schemes such as the Housing Credit Guarantee Scheme and Rent-to-Own models help, but they remain palliative rather than transformative. This dilemma mirrors global challenges.

McKinsey research highlights how housing affordability crises worldwide stem not just from supply shortages, but from misaligned zoning, rising construction costs, and underinvestment by private capital.

For Malaysia, the lesson is clear: policy efforts cannot stop at supply. The system must confront financing hurdles, structural income inequality, and the inefficiencies of project delivery.

Possible solutions

So where do we go from here?

First, stricter enforcement to prevent project abandonment must be a priority. Developers who fail to deliver should face stronger penalties, while state governments can repurpose idle land or stalled projects into public-private redevelopment opportunities.

Second, alternative building technologies – modular construction, for example – can lower costs and shorten delivery timelines. Countries like the United States are already experimenting with off-site construction to cut 20-50 per cent off project time and costs.

Malaysia should seize this.

Third, policies must not only target ownership but also expand quality rental housing. Urban professionals and younger Malaysians need flexible options that reflect real earning capacity.

Finally, wages must catch up. Affordable homes cannot be defined solely by unit price but by their relation to median household income. Without addressing income stagnation, the affordability paradox will persist no matter how many units are built.

In short, Malaysia’s affordable housing agenda has momentum, but it risks falling into a numbers game – counting units rather than building lives.

The real test is not whether Malaysia can meet its targets, but whether ordinary Malaysians can truly afford to call these houses “home”.

-- BERNAMA

Ahmad Nizam Che Kasim is a lecturer attached to the Faculty of Business and Communication, Universiti Malaysia Perlis.