Najib explained that the ongoing mismatch between the homes being built and what people can actually afford reveals deep-rooted structural inefficiencies that can no longer be ignored.

Malaysia's price-to-income ratio stood at 9.78 in 2022, over three times the widely accepted global benchmark of 3.0, clearly showing that many lower- and middle-income households still find owning a home financially out of reach.

He added that affordability is further undermined by barriers to mortgage eligibility, as many families struggle with unstable incomes or poor credit histories.

To break this cycle, Najib recommends introducing a vacancy tax, a charge on empty residential units, which would discourage developers and investors from holding unsold properties purely for speculation. Such a tax, he said, would incentivise developers to adjust prices to match real demand or to repurpose excess inventory into more affordable or alternative housing options.

He stressed that without bold structural reforms like this, the gap between supply and demand will persist, and many Malaysians will continue to be priced out of owning a home.

Cities like Vancouver, Melbourne and Singapore have shown that vacancy-related taxes or holding penalties can deter speculation, match supply with actual demand and speed up the release of idle housing stock, he said.

"These examples show that vacancy-related taxes or holding penalties can effectively align market supply with demand, deter speculative behaviour and stimulate the release of housing stock. This makes such a policy highly relevant for addressing Malaysia's prolonged property overhang."

While price is critical, Najib stressed that affordable housing must also be liveable and accessible. Many lower-cost units remain empty because they are built in fringe or poorly connected areas, driving up commuting costs and discouraging buyers.

"The government should integrate housing policy with urban mobility planning by expanding the public transportation network, particularly rail and bus routes, into developing and high-demand corridors. 

"This would enhance the liveability and attractiveness of affordable homes, ensuring higher uptake rates and reducing the mismatch between supply and demand," he said.

To improve homeownership access, Najib suggested that the government should develop custom mortgage schemes tailored to the financial realities of the lower- and middle-income Malaysians.

He said such measures could cap monthly repayments as a percentage of household income, making them more manageable for lower-income earners.

He added that such schemes should be backed by government guarantees or a dedicated housing finance fund to reduce lending risk for banks and encourage wider participation, providing a safety net in the event of defaults and giving financial institutions the confidence to lend to segments traditionally seen as high-risk.

"Banks also should be incentivised, through regulatory support or financial incentives, to adopt more flexible credit assessments for first-time buyers.

"This may include alternative evaluations beyond traditional credit scores, such as employment consistency, rental history, or utility bill payments.

"By combining risk-sharing mechanisms with inclusive underwriting practices, Malaysia can significantly expand mortgage accessibility for underserved populations and bridge the gap between housing supply and genuine buyer demand," Najib said, pointing to international examples such as Colombia's Mi Casa Ya, India's Credit-Linked Subsidy Scheme, and Singapore's HDB concessionary loans as adaptable models.

Public-private partnerships must also be strengthened, Najib said, with the government offering land incentives, tax breaks or infrastructure support to encourage developers to build affordable, well-located homes priced below RM300,000 without compromising quality.

He also called for a revamp of the National Property Information Centre (NAPIC) to provide more detailed, up-to-date data on local demand, income levels and preferred housing types.

He stated that the property overhang stems from a disconnect between what is built and what people can afford or need, particularly at the local level.

"Incorporating predictive analytics into NAPIC's tools can help forecast demand trends and prevent future mismatches that lead to overbuilding in the wrong segments. 

"Ultimately, stronger data governance and planning will ensure that housing development is targeted, responsive and equitable, supporting a more efficient and sustainable housing market," he added.

Najib further recommended repurposing unsold or outdated units for alternative uses like rental housing, co-living, student accommodation or senior-friendly homes.

Incentives like refurbishment grants or tax relief can help developers convert stagnant stock into homes that meet real demographic needs, he added.