How much should the average Malaysian household income be to afford a home in KV?

Check out our guide (which uses the Debt-to-service ratio rule) to determine which price range and residential neighbourhoods within Klang Valley that best suit your income level. Latest residential property transaction data included at the end! 


© Ahmad Hafidz Abdul Kadir / EyeEm | Getty Images

2019 might seem like a good time for you to jump onto the property ladder – the new government recently announced a stamp duty waiver for the purchase of houses worth RM 300,000-RM 1 million by first time home buyers from January to June 2019.

If you are looking to leverage on this housing incentive, kudos to you! However, although you may think that you are financially ready to be a homeowner, do you know what kind of residential property and which price point you should be looking at? Determining your personal housing affordability isn’t always easy, as you will have to find the right balance between wants/needs and financial capability. Do you have the earning power to purchase a brand new condominium near the city centre? Or could you only afford a sub-sale apartment somewhere in Shah Alam?

Most importantly, how much cash would you need to buy a typical starter house within Klang Valley, which usually ranges between RM400,000 to RM700,00? Will your salary be able to finance the down payment and monthly repayments? Before you start surveying for your dream abode, let’s take a look at your finances and gauge how much you can realistically pay.

How ‘much’ house can your income afford?


When it comes to home purchasing, the general rule of thumb is that your Debt-to-service (DSR) ratio should not exceed 70%. The DSR percentage shows how much of your income is being used to pay off debt and if you can afford to take up the housing loan you have in mind. This formula is commonly used by banks to assess a borrower’s ability to repay his/her monthly instalments, where

DSR = Debt/Net Income X 100

Debt refers to all existing financial obligations, such as credit card repayments, personal loans and student loans, whereas net income refers to your income after deductibles, such as income tax and EPF.

Most banks including Maybank and Public bank have a DSR cap of 65-70%, so it is crucial that you calculate your repayment ability for your target home before making the next move. The last thing you want to be doing is to utilise your entire salary for housing expenses.

For instance, let’s assume your household income is RM5,000 per month (this could either be the salary of a single working professional or a double-income couple). After deducting EPF, income tax and SOCSO, your net income would amount to roughly RM4,300.

*According to the most recent data captured by the Department of Statistics, the median household income in Selangor is RM7,225 but we decided to base our benchmark of RM5,000 on the national median of RM5,228 instead, to take into account that most first time homebuyers fall within the 25-35 age group and they do not have that much earning power yet. 

Hence, in order to fulfil the minimum 70% DSR rule, your household’s total debt cannot exceed RM3,010.

DSR of 70%= RM3,010/RM4,300 X 100 

Let’s say you have the following financial obligations. These estimates are loosely based on the average Malaysian millennial living in an urban area:

  1. Car loan: RM500
  2. Credit card repayments: RM400
  3. PTPTN Loan: RM100.

Other financial debt/obligations = RM1,000. 

Therefore, for those with a gross household income of RM5,000 and net income of app. RM4,300; when taking up a home loan, their monthly instalment figure must not be more than RM2,010.

Total Debt – Other financial debt = RM3,010 – RM1,000 = RM2,010

Read this first if you are planning to purchase a home with your partner. 

Which price range should you be looking at? 

Confused and unsure where to start? – Whip out your calculator and read on! © 123rf

Of course, the RM5,000 household income benchmark will only apply to a certain percentage of the population.

To help other potential buyers (with different household income points) figure out which property price range they should be targeting, we have created a table that details the estimated home loan repayments for the RM400,000 to RM700,000 price range, which is considered affordable to most first-time Malaysian home buyers AND based on the current market supply/new launches in the Klang Valley.

When calculating the minimum net income required for each price range, we ensured that the sum of current debt is RM1,000 (as exemplified above) and the monthly instalment figure does not exceed 70% of the net income stated in the last column.

* The calculations assume a 10% down payment and a 35-year loan tenure. We also utilised a home loan with a 4.5% interest. This rate was used as the average figure from current rates of home loan products available in the market at the moment. The calculations below are tabulated using Loanstreet’s online calculator.

House Price (RM) Loan (90%) Tenure (Years) Monthly Instalment

[Market Interest Rate of 4.5%]

Sum of monthly debt (+RM1,000) Minimum Average Household NET Income (RM)

[DSR = 70%]

400,000 360,000 35 RM 1,704 RM 2,704 *RM 3,863
500,000 450,000 35 RM 2,130 RM 3,130 RM 4,471
600,000 540,000 35 RM 2,556 RM 3,556 RM 5,080
700,000 630,000 35 RM 2,982 RM 3,982 RM 5,689

*Using the 70% DSR rule, here is how we derived RM3,863. 

Average Household NET Income of RM3,863 = 100/70 X RM2,704

Remember that the final sum displayed is of NET income (post-EPF, income tax and SOCSO payments). Do also take note that there are other expenses to consider when purchasing a house – these include legal fees, bank processing fees and insurance costs. It is imperative that you include all these complementary expenses into your budget before making a purchasing decision.

Looking for your dream home is tough, but forking out the initial 10% down payment is an even bigger headache, especially if you’ve just joined the workforce and don’t have significant savings. Nevertheless, there are plenty of alternatives out there which will support your homeownership dream, including utilising the monies from your EPF Account 2.

Where in Klang Valley can you afford?

Now that you roughly know which price ranges you should be looking at, the next thing you would want to determine is which neighbourhood or area to be scouting out for your property. Ask any urbanite for their dream residential location, and most will quote a city centre address – surrounded by plenty of conveniences including public transportation links, popular restaurants, malls and entertainment outlets. The only roadblock is, of course, the hefty price tag.

Nevertheless, there are plenty of residential products throughout various suburbs located on the city fringes. The upgrades in roads networks and rail transportation infrastructure in the past year or two have also contributed to more homes being supplied in the market.

In order to provide readers with an affordability benchmark for various areas, we have analysed the latest residential property transaction data captured by the Valuation and Property Services Department (JPPH), from April 2017 to March 2018. These sales figures are compiled and the median prices are calculated accordingly by’s big data solution,

The images below are heat maps of various residential boroughs within Klang Valley and their respective median prices per sq ft for:

– condominiums measuring between 1,000 – 1,250 sq ft, and

– terrace houses with built-up sizes of 1,501 – 2,000 sq ft, respectively.

You must be wondering why these built-up sizes were selected. These 2 products were actually the most popular residential products bought by Malaysian homebuyers within the same review period (April 2017 to March 2018).

50% of condominium buyers purchased a condominium unit <1,250 sq ft whereas 45% of terrace home buyers purchased a unit measuring 1,250 – 2,000 sq ft.



So, upon calculating your DSR to determine the corresponding property price that’s affordable, you can now narrow down your home search according to the property type and location. For instance, if you are looking for a condominium below RM500,000, then you should be looking at areas such as Shah Alam, Cheras, Setapak and Sri Petaling. Those with a higher budget can scope out the following neighbourhoods – Kota Damansara, Subang Jaya and Taman Desa.

Alternatively, you can still purchase a terrace house for below RM600,000 in suburbs like Klang, Kajang and Setapak. Ultimately, it all depends on your financial capability. All the best and happy home hunting this 2019!