KUALA LUMPUR: Malaysia's "affordable housing" segment is facing a sharp contradiction, according to data from the National Property Information Centre (NAPIC), highlighting a growing disconnect in the property market.
Despite sustained demand for homes priced below RM300,000, tens of thousands of completed units remain unsold, exposing what experts are calling a structural affordability and demand mismatch in the country's property market.
According to NAPIC, 14,201 completed residential units worth RM2.77 billion remained unsold as of the first quarter of the year, accounting for 43.3 per cent of Malaysia's total property overhang, the majority of which are located in the Klang Valley, Johor and Perak.
Housing experts said the numbers point to a deeper issue: affordability is no longer defined by price tags alone but by whether households can realistically sustain total ownership costs in today's economic environment.
National House Buyers Association (HBA) honorary secretary-general Datuk Chang Kim Loong said homes priced below RM300,000 are traditionally viewed as the most accessible entry point for first-time buyers but are increasingly failing to translate into actual purchases.
"The current overhang demonstrates that Malaysia faces not simply a 'housing shortage', but a shortage of well-located, financeable and genuinely affordable homes," he told Business Times.
"Affordability today is not just about the purchase price. It is about the total cost of ownership, and that is where many buyers are struggling," he said.
Chang noted that while a RM280,000 home may appear within reach on paper, the actual financial burden rises significantly once down payments, legal fees, renovation costs, furnishings, maintenance charges, sinking funds, parking fees and daily commuting expenses are included.
"For lower- and middle-income households, the total cost of ownership becomes burdensome. Many households are already stretched by stagnant wage growth, rising living costs, high household debt and multiple credit commitments, which makes total home ownership cost far heavier than the sticker price suggests," he said.
Beyond pricing, Chang pointed to a growing "location trap" in Malaysia's affordable housing segment, where many developments are concentrated in peripheral or suburban areas with weak transport links and limited access to employment centres.
"This has created a situation where potential buyers are increasingly choosing to rent closer to work rather than buy cheaper homes located far away but burdened by higher commuting costs and lifestyle trade-offs.
"The issue is particularly visible in oversupplied corridors where housing supply has expanded faster than population growth and job creation," Chang said.
Developers are also under pressure over product quality, with many so-called affordable homes criticised for very small built-up areas, inefficient layouts, poor design, limited parking, weak workmanship and insufficient amenities.
Chang said this has shifted buyer expectations even within the lower-income segment, with consumers becoming more selective and value-driven rather than price-driven alone.
Olive Tree Property Consultants founder and chief executive officer Samuel Tan said the persistent overhang in the RM300,000-and-below segment is a clear warning that Malaysia's housing challenge is no longer simply about building more homes but about ensuring homes are financeable, well-located and genuinely liveable.
The data from NAPIC, he added, points to a growing "affordable housing paradox", where homes built for mass-market buyers exist in large numbers but remain out of reach in practical, financial and lifestyle terms.
He said the data also reflects a broader structural shift in Malaysia's housing market, where demand is increasingly concentrated in high-quality, well-connected developments.
Meanwhile, Real Estate and Housing Developers' Association (Rehda) Malaysia president Datuk Ho Hon Sang said unsold completed units, while concerning, are not expected to destabilise the broader property ecosystem.
"With that in mind, a high number of unsold but completed units is not something to turn a blind eye to, especially when it comes to units that are deemed to be affordably priced," he told Business Times.
He said there is a clear correlation between rising costs in urban areas and the mismatch between supply and affordability.
Land cost in urban areas pushes home prices in the open market upwards, thus rendering it unaffordable for many in the middle-income group. Even when the price of the unit is deemed reasonable by the purchaser, they will still need to consider if the house and the location have everything they need," he said.
He added that cross-subsidisation requirements imposed on developers, where affordable units must be included in projects, can also distort pricing.
"In most cases, these houses are priced at below the construction cost, thus leaving developers with not much choice but to increase the price of open market units to supplement affordable housing's costs," he said.
Ho noted that homebuying decisions are influenced by multiple factors beyond price, including proximity to transport hubs, workplaces, amenities and infrastructure.
"This is a contributing factor to the mismatch between supply and demand. While there is a need for houses within that price range, it may not be offered within areas that need them the most, such as in cities and bigger towns," he said.
He also pointed to financing constraints, with many potential buyers struggling to meet bank requirements.
At the same time, Ho said shifting lifestyle priorities among younger Malaysians are also playing a role.
"Younger Malaysians may be less inclined to commit to long-term mortgage obligations in an increasingly uncertain economic environment," he said. - NST
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