Malaysia's 13MP Plan: Aiming for One Million Affordable Homes by 2035

The Malaysian government has announced plans to develop one million affordable housing units between 2026 and 2035 under the 13th Malaysia Plan. Experts believe this will help ease pent-up demand and improve homeownership prospects for lower- and middle-income households. To ensure success, measures such as improving financing schemes and integrating housing with schools and community services are necessary.

The Malaysian government, under the 13th Malaysia Plan (13MP), has announced ambitious plans to develop one million affordable housing units between 2026 and 2035. This initiative aims to address the pent-up demand for housing and improve homeownership prospects for lower- and middle-income households. Experts believe that this plan is both bold and ambitious, with significant implications for the country's housing market and economy.

Zerin Properties' chief executive officer, Previn Singhe, highlighted the importance of building these homes in strategic locations close to jobs, transport, and services. He stressed that success will depend on ensuring that these homes genuinely meet the needs of B40 and M40 families and are not at risk of becoming future overhang statistics. To achieve this, Previn emphasized the need for supporting measures such as improved financing schemes, including the expansion of rent-to-own and housing credit guarantee programs, and the integration of schools into large-scale housing projects to enhance liveability and strengthen community value [1].

Olive Tree Property Consultants founder and CEO Samuel Tan echoed these sentiments, noting that while the government's target is ambitious, it is essential to focus on both quantitative and qualitative aspects. Tan highlighted the need for a central housing agency to lead planning and delivery efforts, which could significantly reduce inefficiencies and eliminate duplication of efforts between federal and state bodies [1].

The planned increase in affordable housing supply, particularly in strategic locations, is expected to help ease pent-up demand and improve homeownership prospects for lower- and middle-income households. Improved financing mechanisms, including tiered interest rates and flexible tenure structures, are expected to enhance affordability, especially for first-time buyers. The government's move to empower a central housing agency to lead planning and delivery efforts is also seen as a positive step towards more targeted and effective execution [1].

However, Malaysia faces significant challenges in providing affordable housing for its citizens, with house prices often exceeding what many can afford. This affordability crisis is driven by various factors, including rising land costs, construction costs, and a lack of sufficient affordable housing supply. There is also a discrepancy between the types of housing being built and the actual needs of the population, with an oversupply of high-end properties and a shortage of affordable options [1].

To address these challenges, the construction industry in Malaysia needs to embrace modern technologies and innovative building methods to improve efficiency, reduce costs, and enhance the quality of housing. The adoption of the Industrialised Building System (IBS), for example, can help accelerate construction and lower costs, making housing more accessible [1].

Another significant structural shift proposed under the 13MP is the mandatory adoption of the build-then-sell (BTS) model for housing development. This model aims to curb project abandonment and enhance buyer protection. However, it introduces substantial funding and working capital risks for developers. While the intention is to enhance consumer protection and market credibility, it could also accelerate market consolidation and widen the competitive gap in favor of well-capitalised players [1].

The 13MP's strategies, such as the BTS model and affordable housing targets, are conceptually strong but must be grounded in market data and developer capacity. Enforcing BTS across the board without a phased rollout could tighten housing supply and raise costs in the short term. Additionally, affordable housing should not just be "affordable to build" but also meet the preferences and needs of the target buyers [1].

In contrast, the Indian government has taken a different approach to promoting affordable housing. The International Finance Corporation (IFC) has entered into an agreement with HDFC Capital Advisors to anchor a $1 billion real estate fund focused on green affordable housing in India. The fund will finance projects that prioritise affordable and mid-income housing while implementing the EDGE (Excellence in Design for Greater Efficiencies) green building framework, in line with global sustainability standards [2].

This fund is expected to mobilise up to $850 million in long-term capital from institutional investors and enable the development of at least 25,000 green, affordable, and middle-income housing units. The fund aims to address the housing gap and promote sustainable urban growth in India.

References:
[1] https://www.thestar.com.my/business/business-news/2025/08/11/13mp-boost-for-affordable-housing
[2] https://economictimes.indiatimes.com/industry/services/property-/-cstruction/ifc-hdfc-capital-partner-for-green-affordable-housing-finance-in-india-with-1-billion-fund/articleshow/123165974.cms