Having a hard time determining the most affordable Malaysian state to work and live in? This analysis on house prices and income could help you figure it out!

One major factor in determining which state in Malaysia to work and live in is the comparison between how much you could earn there and how much do houses there cost. After all, even the lowest property prices do not guarantee that you could earn enough to afford it. Affordability and location matters when it comes to working and finding a home.

As numbers vary by state, we’ve done the hard work for you (more about our calculations below) and narrowed down your options between the 13 states and 3 federal territories in Malaysia. For the purpose of this article, we are calling them all “states”.

We present to you the top 4 most affordable states to work and live in, plus 3 honorable mentions!

Our Data Sources and Algorithms

Some background on how did we identify ranking between the 13 states and 3 federal territories in Malaysia.

This article uses a straightforward way of comparing the annual income of a median household and the median house prices in all the Malaysian states.

Median House Price / Median Household Income = Median multiple

Data on annual household income are taken from Department of Statistics Malaysia (DOSM), while data on property prices are from National Property Information Centre (NAPIC).

As data on property prices in 2014 is not readily available, 1st quarter 2015 data instead will be used to proxy for the year 2014.

Most Affordable State #1: Putrajaya

In 2019, Putrajaya’s median house prices was RM260,000 while the median household annual income was RM119,796. This means that Putrajaya has a median multiple of only 2.17 times, making it the most affordable place to live in Malaysia.

260,000/119,796 = 2.17

As one of the federal territories, Putrajaya is has gained prominence as the center of the nation’s governing power and whose popularity has soared in recent years. Many developers are flocking to Putrajaya due to the intense competition experienced in nearby Kuala Lumpur and Selangor, to take advantage of the relatively cheaper prices of land in Putrajaya.

Putrajaya is fast becoming the new center of economic activities, with household income growing the quickest at an annual growth rate of 6.5% from 2016 to 2019. Aside from housing most of the nation’s government employees, many high-tech firms are also situated in neighboring Cyberjaya which is a science park at its core.

Most Affordable State #2: Malacca

In 2019, Malacca’s houses registered a median price of RM200,000, making it the cheapest state to live in after Kedah (RM199,100). Meanwhile, households earned about RM72,648 per year, resulting in a median multiple of 2.75 times.

200,000/72,648 = 2.75

Malacca is a place filled with historical and cultural significance, and many Malaysians consider it as the best domestic tourist spot in Malaysia for weekend getaways. It will delight many fans to know that it is also one of the most affordable states to work and live in.

5 years ago, Malacca was considered an unaffordable state to live in, with a median multiple of 3.98 times in 2014. This situation has vastly improved as annual income and salaries have grown from RM60,348 in 2014 to RM72,648 in 2019. Median house prices on the other hand, have actually declined from RM240,000 in 2014 to RM200,000 in 2019.

Most Affordable State #3: Negeri Sembilan

In 2019, Negeri Sembilan’s median house prices was RM206,750 while the median household annual income was RM50,060. This results in a median multiple of 3.44 times, which actually makes houses in Negeri Sembilan actually unaffordable.

206,750/50,060 = 3.44

Although the numbers fall in the unaffordable range, it is a significant improvement from circumstances in 2014 when Negeri Sembilan had a median multiple of 5.05 times! House prices declined considerably from RM250,000 in 2014 to RM206,750 in 2019, making houses more affordable. Moreover, household income grew at an average of 3.9% every year from 2014 to 2019.

More and more people working in the Klang Valley are choosing to stay in Negeri Sembilan in light of the cheaper house prices and manageable travelling distance to Klang Valley thanks to availability of highways.

Most Affordable State #4: Kuala Lumpur

In 2019, houses in Kuala Lumpur were at RM480,000, far outpacing the second highest which was Selangor at RM380,000. However, it also boasts the highest median annual income of RM126,588, resulting in a median multiple of 3.79 times, which ranks as unaffordable.

480,000/126,588 = 3.79

Kuala Lumpur getting on this list is good news for people working here. After all, it has the highest median price out of all the states in Malaysia being the capital city. Malaysians flock to Kuala Lumpur for more job opportunities, and many have complained about the unaffordable house prices.

Median house prices have remained steady, with 2014 registering RM490,000 while income has instead grown strongly from RM91,440 in 2014 to RM126,558 in 2019. This has helped make houses in Kuala Lumpur more affordable, as the median multiple was high at 5.36 times in 2014.

This bodes well for the development of Kuala Lumpur with houses becoming more affordable as more and more Malaysians are expected to migrate to Kuala Lumpur in search of higher paying jobs.

Honorable Mention #1: Terengganu

The home of Nasi Dagang and Kerepok Lekor, Terengganu is the only east coast state that made it to the list of the best states to work and live in. Many here are involved in the oil and gas industry, but it also has increasingly become the hub of tourist activities with its gorgeous islands and coral reefs.

Terengganu houses were priced at a median of RM255,000, while households earned about RM66,540 in 2019. This implies a median multiple of 3.83 times.

255,000/66,540=3.83

Terengganu has came a long way as houses were considered severely unaffordable at a median multiple of 6.18 times in 2014, making it then one of the most unaffordable states in Malaysia.

This was helped by house prices coming down from RM280,000 in 2014 to RM255,000 in 2019, with income also growing at a very strong rate of 8.0% yearly from 2014 to 2019. If you are looking for beautiful beaches, relaxing waves and pristine coral reefs, look no further.

Honorable Mention #2: Kedah

Going over to the rice bowl of Malaysia, Kedah, it trails Terengganu slightly in terms of working and living but has the advantage of being very close to Penang. Home to two prime ministers, Tunku Abdul Rahman and Tun Mahathir, it also has one of the best tourism spots in Malaysia, Pulau Langkawi.

In 2019, Kedah registered the lowest median house price in Malaysia at RM199,100, with a household median income of RM51,900. This implies a median multiple of 3.84 times, making it moderately unaffordable.

199,100/51,900 = 3.84

Regardless, this denotes a big improvement from 2014 when the median multiple was 4.47 times! Thankfully, household income grew steadily from RM41,412 in 2014 to RM51,900 in 2019.

Kedah is really an underappreciated state to live in, being in close proximity to Penang and houses being more affordable.

Honorable Mention #3: Penang

Lastly, Penang, home to UNESCO’s world heritage sites and one of the most important natural ports in Malaysia. Other than that, its street food is world class and is a mecca for food foodies from around the world. The Penang Asam Laksa was placed 7th in the world in the World’s Top 50 Best Foods by CNN.

While many news media have highlighted the ongoing problems of houses being unaffordable in Penang, it has since leap frogged its way in being a very comfortable state to live and work in. Its median housing prices have declined from RM350,000 in 2014 to RM285,000 in 2019, a full 18.5% reduction. Households in Penang are earning RM74,028, which implies a median multiple of 3.85 times.

285,000/74,028 = 3.85

Penang is an example of a success story of providing affordable housing to the masses, where in 2014, it was considered severely unaffordable at a median multiple of 6.20 times. Rejoice, Penangites, as things are starting to look up for the state in terms of livability.

Conclusion

Living and working in Malaysia is not just a function of choosing the lowest house price but also determining how much value does your salary and wages have in affording houses to live in. Even then, the best job opportunities with the highest salaries does not guarantee that houses are affordable to live in. The example of Kuala Lumpur, indicates that house price needs to be in line with household income growth also. Surprisingly, 4 of the best states to work and live in Malaysia are actually, Putrajaya, Malacca, Negeri Sembilan, and Kuala Lumpur in that order.

Both Sabah and Sarawak are the most unaffordable states with median multiples of 5.90 times and 5.74 time respectively, where affordability has instead deteriorated throughout the years. You can find the chart below on all the other states on where they stand.

 

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Is your favorite state not in the list? Let us know in the comments below why you think other states should be in the list!