Unaffordable housing: Longer loan tenures contribute to increase in house prices

House prices in Malaysia are rising faster than incomes, but longer loan terms make homes seem more affordable.From 2012 to 2014, the median house price increased by 23 per cent annually, rising from RM170,000 to RM270,000. Meanwhile, median household incomes grew at less than half that rate.Theebalakshmi Kunasekaran, a researcher from Khazanah Research Institute, links the widening income-housing price gap to financial innovations like longer loan terms and higher loan-to-value (LTV) ratios, which make expensive homes more accessible but lead to higher overall costs.In her report "Affordable Housing or Affordable Debt?" She explains that while longer loan terms reduce monthly payments, they increase financing costs without solving affordability issues.To achieve true affordability, Theebalakshmi calls for reforms, including shortening loan tenures; switching to a Build-Then-Sell system; using cost-effective construction methods and aligning house prices with local income levels.Read more: https://www.nst.com.my/property/2024/12/1152993/unaffordable-housing-longer-loan-tenures-contribute-increase-house-prices ----------------------------------#NST #NSTTVvisit us at http://www.nst.com.my our Facebook http://www.facebook.com/nstonlinemore news at http://www.twitter.com/NST_Online Instagram http://www.instagram.com/nstonlineand also Tiktok https://www.tiktok.com/@nstonline