Ipsos Malaysia urges govt to review 30pc rule for housing affordability

KUALA LUMPUR, Nov 14 — Ipsos Malaysia has called for a review of 30 per cent rule for housing affordability as a recent study conducted in Selangor showed a growing number of people falling into the “house-poor” category.

The study, carried out by Ipsos Malaysia together with researchers from Sunway University, Monash University and Durham University, found that the more accurate expense-to-income ratio rate is at 23.5 per cent.

“The range of this indicator for various scenarios falls between 20.6 per cent and 28.7 per cent much lower than the conventional 30 per cent.

“Implications of revising the indicator from the current 30 per cent to 23.5 per cent are likely to lead to many more households being classified as ‘house-poor,’ for example those that perceive their housing costs to be a financial burden,” Ipsos Malaysia said in a statement today.

The Malaysian government currently uses the 30 per cent rule as one of the main indicators to determine housing affordability in Malaysia.

Housing is deemed unaffordable if households spend more than 30 per cent of their household income on housing expenses.

“In addition to being an outdated and arbitrary Depression-era guideline, this indicator is not based on the needs of Malaysian households, which leads to sub-optimal policies.

“This creates a need for a local data-driven and more accurate indicator, which would be relevant and useful for Malaysian policymakers and observers,” the market research firm said.

Ipsos Malaysia said the study confirms that the 30 per cent threshold is outdated and does not serve the needs of the data-driven policy-making process in Malaysia.

It also said that the findings of this study will contribute to the existing body of work on measuring housing affordability that accounts for how households understand it.

“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 said.

Ipsos Malaysia also said that under the stewardship of the Department of Statistics of Malaysia (DOSM), 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 policy-making processes and set new examples of best practices for the region.