Question
Affordable Housing: Challenges and
the Way Forward
Authors: Cheah Su Ling, Stefanie Joan Almeida, Ho Su Wei
CRAAP evaluation: why is this source credible?
Key facts
HIGHLIGHTS
• Houses in Malaysia remained unaff ordable to many households in 2016 due
to the failure in the market to produce a suffi cient quantity of aff ordable
housing for the masses.
• Policy propositions include establishing a single entity to spearhead
aff ordable housing initiatives, setting up an integrated database to assist
in matching demand and supply, and reducing costs. On the demand
side, strategies include rehabilitating the balance sheet of households and
improving the rental market.
Introduction
Housing aff ordability is a global concern plaguing key cities around the world in both developing and
advanced economies. The key drivers include the rise in income growth and urbanisation, driven by better
job opportunities in cities. Aff ordable housing is defi ned1
as housing which is suffi cient in quality and location,
and is not so costly that it prevents its occupants from satisfying other basic living needs. In other words, the
location, quality and build-up of a house is equally as important as the fi nancial aff ordability of a house. In
2014, the McKinsey Global Institute estimated that 330 million urban households globally live in substandard
housing or are fi nancially stretched by housing costs. Malaysia faces a similar issue in this regard. A number
of reasons encompassing structural, cyclical, institutional and cultural factors, culminating in a mismatch
between supply and demand, has contributed towards houses becoming seriously unaff ordable in Malaysia in
2016. Consequently, Malaysia faces a shortage of aff ordable homes for the masses. This box article focuses
on drawing out for public discussion, several policy propositions as a way forward in addressing this challenge.
A. The state of housing aff ordability in Malaysia
In 2016, houses in Malaysia remain seriously unaff ordable by international standards with a median multiple2
of 5.0. The maximum aff ordable house price in Malaysia is estimated to be RM282,0003
. However, actual
median house price was RM313,000, beyond the means of many households, where the median national
household income is only RM5,228.
The housing aff ordability issue in Malaysia is largely due to the supply-demand mismatch and slower
income growth. Financing continued to be available for purchases of houses for eligible borrowers, with
more than 70% of housing loans accorded to fi rst-time buyers and close to two-thirds of new housing loans
channelled to the purchase of houses below RM500,0004
. On the supply side, structural and cyclical factors
in the housing market in Malaysia have resulted in a failure of the market to provide an adequate supply of
aff ordable housing for the masses (Figure 1). On the demand side, growth in household income has not kept
up with the rise in house prices. Together with a low state of fi nancial literacy amongst a majority of Malaysian
households, and a cultural preference towards home-ownership instead of renting, these have contributed to
the high demand for house purchases.
the Way Forward
Authors: Cheah Su Ling, Stefanie Joan Almeida, Ho Su Wei
CRAAP evaluation: why is this source credible?
Key facts
HIGHLIGHTS
• Houses in Malaysia remained unaff ordable to many households in 2016 due
to the failure in the market to produce a suffi cient quantity of aff ordable
housing for the masses.
• Policy propositions include establishing a single entity to spearhead
aff ordable housing initiatives, setting up an integrated database to assist
in matching demand and supply, and reducing costs. On the demand
side, strategies include rehabilitating the balance sheet of households and
improving the rental market.
Introduction
Housing aff ordability is a global concern plaguing key cities around the world in both developing and
advanced economies. The key drivers include the rise in income growth and urbanisation, driven by better
job opportunities in cities. Aff ordable housing is defi ned1
as housing which is suffi cient in quality and location,
and is not so costly that it prevents its occupants from satisfying other basic living needs. In other words, the
location, quality and build-up of a house is equally as important as the fi nancial aff ordability of a house. In
2014, the McKinsey Global Institute estimated that 330 million urban households globally live in substandard
housing or are fi nancially stretched by housing costs. Malaysia faces a similar issue in this regard. A number
of reasons encompassing structural, cyclical, institutional and cultural factors, culminating in a mismatch
between supply and demand, has contributed towards houses becoming seriously unaff ordable in Malaysia in
2016. Consequently, Malaysia faces a shortage of aff ordable homes for the masses. This box article focuses
on drawing out for public discussion, several policy propositions as a way forward in addressing this challenge.
A. The state of housing aff ordability in Malaysia
In 2016, houses in Malaysia remain seriously unaff ordable by international standards with a median multiple2
of 5.0. The maximum aff ordable house price in Malaysia is estimated to be RM282,0003
. However, actual
median house price was RM313,000, beyond the means of many households, where the median national
household income is only RM5,228.
The housing aff ordability issue in Malaysia is largely due to the supply-demand mismatch and slower
income growth. Financing continued to be available for purchases of houses for eligible borrowers, with
more than 70% of housing loans accorded to fi rst-time buyers and close to two-thirds of new housing loans
channelled to the purchase of houses below RM500,0004
. On the supply side, structural and cyclical factors
in the housing market in Malaysia have resulted in a failure of the market to provide an adequate supply of
aff ordable housing for the masses (Figure 1). On the demand side, growth in household income has not kept
up with the rise in house prices. Together with a low state of fi nancial literacy amongst a majority of Malaysian
households, and a cultural preference towards home-ownership instead of renting, these have contributed to
the high demand for house purchases.
Answers
GPT-4o mini
To evaluate the credibility of the source "Affordable Housing: Challenges and the Way Forward" using the CRAAP criteria (Currency, Relevance, Authority, Accuracy, and Purpose), we can assess each component as follows:
### Currency
- **Current Information:** The article uses data from 2016, focusing on recent trends and statistics related to housing affordability in Malaysia. While this may seem dated, the discussion of structural issues and policy implications can still be relevant as they address enduring factors that influence housing markets.
### Relevance
- **Audience Appropriateness:** The content is relevant to policymakers, urban planners, economists, housing advocates, and anyone interested in social issues related to housing. The information provided could be beneficial for those looking to understand housing challenges not just in Malaysia, but in a global context, particularly in urban settings.
### Authority
- **Author Credentials:** The authors, Cheah Su Ling, Stefanie Joan Almeida, and Ho Su Wei, are presumably knowledgeable on the topic given that they authored a piece targeting a complex issue. However, the evaluation of their authority would be stronger with disclosures of their qualifications, affiliations, or past work in related fields.
### Accuracy
- **Reliability of Information:** The article provides specific data points and empirical evidence (e.g., median house prices, household income statistics) to support its claims. It references credible sources like the McKinsey Global Institute, which enhances its accuracy. However, it could be strengthened with citations that allow readers to verify the statistics presented.
### Purpose
- **Intent and Objectivity:** The purpose of the article seems to be to inform and propose actionable solutions for a pervasive issue—housing affordability. While it appears focused on advocating for policy changes, it does not report extreme bias but rather highlights challenges and potential strategies. This suggests a constructive intent to address an important societal issue.
### Conclusion
Overall, the source appears to be credible based on the CRAAP evaluation criteria. It tackles a significant issue with relevant information and a clear aim of advocating for improvements in housing affordability. However, further verification of the authors' credentials and the inclusion of up-to-date information or more recent studies could enhance the assessment of the source’s reliability.
### Currency
- **Current Information:** The article uses data from 2016, focusing on recent trends and statistics related to housing affordability in Malaysia. While this may seem dated, the discussion of structural issues and policy implications can still be relevant as they address enduring factors that influence housing markets.
### Relevance
- **Audience Appropriateness:** The content is relevant to policymakers, urban planners, economists, housing advocates, and anyone interested in social issues related to housing. The information provided could be beneficial for those looking to understand housing challenges not just in Malaysia, but in a global context, particularly in urban settings.
### Authority
- **Author Credentials:** The authors, Cheah Su Ling, Stefanie Joan Almeida, and Ho Su Wei, are presumably knowledgeable on the topic given that they authored a piece targeting a complex issue. However, the evaluation of their authority would be stronger with disclosures of their qualifications, affiliations, or past work in related fields.
### Accuracy
- **Reliability of Information:** The article provides specific data points and empirical evidence (e.g., median house prices, household income statistics) to support its claims. It references credible sources like the McKinsey Global Institute, which enhances its accuracy. However, it could be strengthened with citations that allow readers to verify the statistics presented.
### Purpose
- **Intent and Objectivity:** The purpose of the article seems to be to inform and propose actionable solutions for a pervasive issue—housing affordability. While it appears focused on advocating for policy changes, it does not report extreme bias but rather highlights challenges and potential strategies. This suggests a constructive intent to address an important societal issue.
### Conclusion
Overall, the source appears to be credible based on the CRAAP evaluation criteria. It tackles a significant issue with relevant information and a clear aim of advocating for improvements in housing affordability. However, further verification of the authors' credentials and the inclusion of up-to-date information or more recent studies could enhance the assessment of the source’s reliability.