This is a picture of Household Incomes in Malaysia:
This chart was based on figures given by a Minister in July 2008 in Parliament. It shows what educated middle-class people living in the capital city sometimes forget (that’s me specifically) – that many of our countrymen are still poor. I can’t quite imagine how families (8.6% of households) can survive on less than RM1000 (USD280) a month. According to these figures, more than a third of households earn less than RM2000 a month. From another report, the average household income is RM3686.
My friend Peter Davis at UPM had written on Housing Affordability - using a 3-year income rule of thumb to gauge affordability. He did not have the household income figures at the time, so he made an estimate based on per capita GDP, and average family income came to only RM2000 per year and the average affordable house, RM72 000. We both agreed that this figure seemed too low – perhaps the statisticians were not able to capture the informal income that sustained the poor. Perhaps the statisticians put in more resources to get accurate figures for higher (and taxable) income groups!
So I updated Peter’s picture of Affordable Houses and compared it with our “opportunity surveys" in Pekan, Sungei Petani and Kuantan. This is it:
The figures from our narrow, non-random opportunity surveys were not bad. We can understand why we got lower figures for the cheapest homes – maybe for the poorest families actually owning a house is not realistic or is even a priority (the really important thing would be to secure better income); maybe, as Peter suspected, their informal sources income has not been taken into account.
We can also understand why we didn’t pick up the demand for houses in the high end. The simple reason was that we there are not many rich people milling around Government offices – civil servants are not exorbitantly paid, and the wealthy can delegate the chores that require going to these offices.
Anyway, imperfect as it may be, this is our view at the sort of house prices Malaysian families can afford. But what are developers are bringing on to the market? That is for the next post...