MIDF Research maintains positive outlook on property sector

• According to the National Property Information Centre, Malaysia’s house price index has been on an upward trajectory since 2022, following the reopening of the economy.

KUALA LUMPUR (April 18): MIDF Research has maintained a positive outlook on the property sector, as it sees that the landscape for the sector is improving, underpinned by a stable house price index (HPI) outlook, an unchanged overnight policy rate at 3.0%, and a noticeable reduction in residential overhang.

Additionally, the upcoming infrastructure projects, such as the Johor Bahru-Singapore Rapid Transit System (RTS) Link and Penang Light Rail Transit (LRT), will further improve connectivity and support buying sentiments on property in Malaysia, the research firm said.

According to the National Property Information Centre, Malaysia’s HPI has been on an upward trajectory since 2022, following the reopening of the economy.

The HPI has been on a growth trajectory since the fourth quarter of 2021 (4Q2021), experiencing a robust recovery throughout 2022, driven by improvements in the Malaysian property market.

In 3Q2023, the HPI stood at 219.4, marking a notable increase from the 216.8 recorded in 2Q2023, and 218.0 in 3Q2022.

Meanwhile, the research firm opined that the rising construction cost and inflationary pressure may drive property prices marginally higher, as developers pass on higher costs to homebuyers.

At the same time, it noted that loan applications declined on a yearly basis for the first time in eight months, as demand for property took a breather.

According to Bank Negara Malaysia, the total loan applications for the purchase of property declined by 21% month-on-month in February 2024 to RM40.1 billion, due to the short month.

On a yearly basis, loan applications in February 2024 were lower by 19% year-on-year (y-o-y), after a strong growth of 46% y-o-y in January 2024.

“Nevertheless, total loan applications in the first two months of 2024 was higher by 8.0% y-o-y to RM91 billion, which indicates stronger demand for property,” it added.

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