Scarcity of land has caused to the escalating prices of housing in Penang. The current average condominium price on the Penang island itself is RM450,000 while the median household income is RM52,884, which is equivalent to RM4,407 per household (Source: Penang Monthly, 2012). In fact, the house prices on the island have increased by 50% over the last 5 years.
However, the middle income groups have not experienced an increase in their wages, and the cost of living continues to rise on yearly basis, which biting into any income growth. As a whole, the ratio for Penang state is 5 (RM265010/RM52884), which has been risen from 4 in year 2006.
In comparison, the house price-to-income ratio for US was 3 until 2000, and it rose to 5.8 by 2006, before the subprime crisis. In UK the ratio reached 11 in 2008, just before the credit crunch. The above figures are obtained from October 2011 research on ‘Supply and Demand in the Penang housing market: Assessing Affordability‘ published by Penang Institute.