Market Analysis of Housing Shortages in Malaysia

The annual supply of housing in Malaysia is approximately four units per 1000 of the population; this is less than the recommended 8-10 units per 1000 in developing countries, implying that the Malaysian housing deficit units are likely to be on the increase. While the market is the most efficient way to determine housing price, the capital market for [affordable] housing have a very weak mechanism that if left unregulated will be ineffective and inefficient. The cost of accommodation continues to increase despite various government measures in the form of taxes and subsidies. Through a case study approach and survey questionnaire, this study examines the operation of affordable housing market the factors that determine the cost of affordable housing. The case study involved one of the affordable housing schemes. The study demonstrates that to base affordable housing price on market prices are seriously deficient in that it ignore the basic essence of affordable housing provision. There is no real basis for economists' strongly held believe that house prices must be determined by the market to be efficient. With the Kaiser-Meyer-Olkin measure 0.714, and Bartlett's test of sphericity (χ2 (1005) = 563.821, p < 0.05), the major determinants of housing costs are strategic location, size of the housing and location. The study shows that government can intervene in affordable housing market in various ways to increase the homeownership rate