Southeast Asia is one of the fastest developing regions in the world, with rapid economic growth and increasing populations in the urban areas. With these changes, it is anticipated that there will be a huge amount of population shift from rural areas to urban areas. With the increasing population in urban areas like Kuala Lumpur, the demands for rental properties also increase. However, with the scarcity of occupancy spaces readily available, the resources in the targeted areas are being pushed to the maximum capacity to cater to the growing demands of urban dwellers. Consequently, this results in a bludgeoning increase in property prices and rental rates, creating affordability issues in many countries.
According to data from the World Bank, one of the most expensive places to obtain property around Malaysia and the immediate surrounding countries is Jakarta, where the ratio of the price of a condominium about 35 square metres in the city centre to the per capita income is 23.5. This is followed by Bangkok (9.2), Singapore (8.2), and Kuala Lumpur being one of the lowest at the ratio of 6.1. Notice that even the country with the lowest prices has a high disparity between the per capita income and the property price. This results in increasing amounts of “shared dwellings”, where the urbanites, especially young ones, share the cost of housing by simply sharing a house. The rental is split among the people who live in the house. While this is practical for young singles, families might have a tougher time, leading to the development of urban slums, as evidenced by the many Citizen Housing Projects all over Malaysia.
When comparing general monthly rental costs, a 3 bedroom apartment in the city centre in Kuala Lumpur costs RM 4275.09 per month. In Thailand, the same costs RM 8088.65, while Jakarta’s 3 bedroom apartment rentals go up to RM 7867.69. Singapore has the most expensive rental cost at a whopping RM 16,783.57 monthly for a 3 bedroom apartment. However, when considering the per capita income, the affordability of the rentals comes into question. The most affordable city to live in is Kuala Lumpur, while Jakarta is the most expensive at 23.5. There isn’t much difference between Singapore and Bangkok, with the difference in the ratio being 1.
It is questionable, in the near future, that these numbers would remain consistent. As evidenced by the surge of people moving into urban areas in the downturn of the country’s economy, the per capita income remains more or less the same, while rental cost and property prices are increasing sharply.
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