MIDF Research said it expects affordably priced properties to continue having resilient demand, especially among first-time home buyers.
PETALING JAYA: The pause in interest rate hikes by Bank Negara is expected to spur buying interest within the local property market, especially for affordable homes.
MIDF Research in a report yesterday said it expects the affordably priced properties to continue having resilient demand, especially among first-time home buyers.
“While the continuous decline in loan applications is slightly negative to the sector, the pause in the overnight policy rate (OPR) hike may support recovery of buying interest going forward.
“Hence, we maintain our ‘neutral’ stance on the property sector.”
In terms of top picks for the sector, MIDF Research said it remains in favour of companies that focus on affordably priced properties.
“We like Mah Sing Group Bhd
and Glomac Bhd, due to their high exposure to the mid-market and affordable homes segments.”
Commenting on interest rates, MIDF Research noted that Bank Negara paused the OPR hike in January 2023 by keeping it unchanged.
“The pause in the OPR hike provided short-term relief to the property sector, as the four consecutive hikes by a total of 100 basis points in 2022 hurt the affordability of buyers.
“We see that the pause in the OPR hike to be a short-term positive to the property sector, as property buyers are still digesting the numerous hikes in 2022.”
The research house said the “euphoria” of the temporary pause in the OPR hike had lifted the KL Property Index by 2.3% from January 19, 2023 to date.
“Looking ahead, we see that buying interest in property may recover slightly following the pause in the OPR hike.”
On a separate note, MIDF Research pointed out that loan applications for the purchase of property continued to decline for four consecutive months in December 2022.
Citing data from Bank Negara, the research house said total loan applications eased by 6.5% month-on-month in December 2022, following a decline of 3% in November 2022.
“We see that the continued decline in loan applications could be due to the OPR hikes in September and November, which reduced buying interest as a result of higher monthly instalments.
“Besides, the lack of incentives for the purchase of property for house buyers kept buying interest muted.”
On a yearly basis, MIDF Research noted that loan applications tumbled 26% year-on-year (y-o-y) in December 2022, following a steep y-o-y decline of 21% in November 2022.
This was as buying interest on property continued to normalise from the surge in demand, following the reopening of the economy, the research house noted.
Additionally, MIDF Research said total loans approved for purchase of property eased slightly by 1% month-on-month in December 2022, following a decline of 12% month-on-month in November 2022.
