Malaysia must urgently adopt structural reforms, including the introduction of a vacancy tax, to resolve its persistent housing overhang and improve homeownership access for the B40 and M40 income groups, according to Dr Muhammad Najib Razali, Associate Professor of Property Economics at Universiti Teknologi Malaysia.
Dr Najib highlighted the entrenched mismatch between residential developments and actual housing demand, underscoring that current market inefficiencies are contributing to affordability challenges. “Malaysia’s price-to-income ratio reached 9.78 in 2022—more than triple the global affordability benchmark of 3.0,” he said. “This clearly indicates that homeownership remains out of reach for many low- and middle-income households.”
He noted that structural constraints are exacerbated by limited access to mortgage financing, with many families facing difficulties due to unstable incomes or poor credit profiles.
To address the problem, Dr Najib proposed the implementation of a vacancy tax on unoccupied residential units. Such a measure would discourage speculative hoarding by developers and investors, and incentivise the release or repurposing of unsold properties into more accessible housing types. “Cities such as Vancouver, Melbourne and Singapore have successfully employed vacancy-related taxes to suppress speculative behaviour and accelerate the release of idle housing stock,” he said.
Dr Najib also emphasised that affordability must be aligned with liveability. Many low-cost homes remain unsold not due to pricing, but because they are located in remote or poorly connected areas, deterring prospective buyers. He recommended that housing policy be integrated with urban transport planning to ensure accessibility. “The expansion of public transport—particularly rail and bus networks—into high-demand corridors will improve the attractiveness and uptake of affordable homes,” he said.
To enhance mortgage accessibility, Dr Najib called for the development of tailored financing schemes for lower-income households. These would include capped monthly repayments tied to household income and government-backed guarantees or housing funds to reduce banking sector risk.
He further encouraged regulatory support for banks to adopt flexible credit assessment models. These may include evaluations based on employment stability, rental payment history or utility bill records, rather than traditional credit scores. Dr Najib cited international models such as Colombia’s Mi Casa Ya, India’s Credit-Linked Subsidy Scheme, and Singapore’s HDB concessionary loans as potential templates for adaptation in Malaysia.
Strengthening public-private partnerships is also critical, he noted. Government-led initiatives such as land provision, tax incentives and infrastructure support could spur the development of affordable, well-located homes priced under RM300,000 without sacrificing quality.
Dr Najib also called for the revamp of the National Property Information Centre (NAPIC) to deliver granular, real-time data on regional housing demand, income levels, and consumer preferences. “The current overhang reflects a systemic disconnect between supply and actual needs at the local level,” he said.
He proposed the incorporation of predictive analytics within NAPIC’s framework to improve demand forecasting and prevent future oversupply in unsuitable segments. “Robust data governance is essential for ensuring that housing development remains demand-driven, efficient and equitable,” he added.
Lastly, Dr Najib recommended repurposing unsold units into alternative housing formats, such as rental properties, co-living spaces, student housing or age-friendly residences. Incentivisation through refurbishment grants or tax relief could facilitate this transition and align supply with Malaysia’s evolving demographic landscape.
-NST
