Since 2012, the increase in house prices in Malaysia has outstripped the rise in income levels. Consequently, prevailing median house prices are beyond the reach of most Malaysians. This is primarily attributable to a gross mismatch between housing supply and demand amid diverging expectations between households and developers. The issue has been compounded by the fact that the distribution of new housing supply has been concentrated in the higher-priced categories. The undersupply of housing is particularly acute in the affordable housing segment. The provision of affordable homes has become a challenge for policymakers worldwide, with Malaysia being no exception. It is a similar problem in the United States (US), United Kingdom (UK), Australia and New Zealand (Demographia International, 2015). This article1 aims to define what affordable housing means in the Malaysian context, given income levels and demographic factors. With this, the level of affordable housing supply needed at present and in the future is estimated. The article then identifies some of the policies used by other countries in addressing the shortage of affordable housing which provide important policy lessons for dealing with the situation in Malaysia.