Institut Rakyat noted that the federal government's national Housing Affordability Index had improved slightly in recent months, but said houses in regions such as Sabah, Sarawak and Kuala Lumpur were far more unaffordable than suggested by the official statistics for the entire country.

In the national index, the average house price in Malaysia was 5.79 times the annual income of the median household here by the end of 2012, and 5.52 in the first half of this year — a number considered internationally as severely unaffordable.

"However, the national figure disguises tremendous regional disparities," the think-tank said in a statement signed off by its executive director, Yin Shao Loong.

According to Institut Rakyat's own Housing Affordability Index released today, the think-tank zoomed in on the different states by comparing the latest average house prices and the annual income of households there.

"Research by Institut Rakyat has revealed that the price of an average home in Sabah is over 11 times more than the annual income of a typical Sabahan family. In general, homes in Sabah were twice as unaffordable as the national average,” he said.

In the think-tank's index, six states fell in the "severely unaffordable" category, namely Sabah (11.41), Sarawak (9.04), and Kuala Lumpur (8.22), Selangor (5.88), Pulau Pinang (5.83), and Kelantan (5.54).

Those in the "seriously unaffordable" category in descending order of the cost of houses against household wages are Terengganu (4.93), Pahang (4.84), Perak (4.67), Kedah (4.40), Perlis (4.37) and Johor (4.20), while Negeri Sembilan (3.71) and Malacca (3.16) were ranked as "moderately unaffordable".

Even in the top three states where Malaysians are better able to afford houses, the housing cost was still three times higher than the annual income of median households, the think-tank said.

In explaining the wide gap between housing affordability in east Malaysia and the other states, Institut Rakyat said that Sabah and Sarawak "suffer from a combination of weak household incomes and house prices that are far higher than the national average, with average prices comparable to Selangor."

The think-tank noted that the federal government has largely focused on controlling house prices to help ensure housing affordability, but said Putrajaya should also seek to boost the purchasing power of Malaysians.

Wage growth was lower than the growth of home prices that have doubled since 2000, Institut Rakyat said, adding that Malaysians were also lagging behind their regional counterparts in terms of the share of wages in the national economy.

"Wages in Thailand and South Korea take up over 60 per cent of their Gross Domestic Product (GDP), meaning that workers share more in national prosperity. In Malaysia wages comprised only 33.6 per cent of GDP in 2013, and the government is only aiming to raise them to 40 per cent of GDP by 2020. Growth in the wage share has been deeply unimpressive," it said.

Today's wage share is little different from back in 1971, when wages amount to 33.8 per cent of the GDP, it said.

"Individual salaries have not kept pace with the rise in house prices. While average house prices increased 11.8 per cent between 2011 and 2012, the median salary only grew by 7.7 per cent," it added.

"While national and state governments should continue to apply downward pressure on house prices, the federal government needs to generate more upward pressure on wages in order to close the gap between market conditions and the desire of Malaysian families to own a home," it said.