Housing market steady despite increase in OPR

KUALA LUMPUR: The housing market is expected to remain robust with moderate price increases and demand continuing to grow despite the rise in the overnight policy rate (OPR) by 25 basis points to 3%.

Juwai IQI co-founder and group chief executive officer Kashif Ansari said in a statement that housing market indicators have been positive over the past three quarters with rising transaction volume and declining overhang.

“We are confident this positive trend will continue in the second quarter. Although the higher rates make purchasing and developing housing more expensive, we believe the real estate market can absorb this increase.

“For buyers, the higher mortgage is offset by improved household financial circumstances among many families,” he said.

How the 25-basis-point OPR rise would affect a typical homebuyer would depend on the circumstances, he said.

For a RM500,000 mortgage at 3.5% and a remaining 20-year term, a 0.25% rise in interest rate would lead to an additional RM124 per month.

The OPR rise would increase borrowing costs for developers.

“We could see the number of projects being planned and those starting construction over the next six months moderatiing.

“In 2022, construction started on 98,000 landed and high-rise residential units. By the end of the year, just over 89,000 units were in the pipeline for future construction,” he said.

According to Kashif, Bank Negara is determined to rein in inflation and ease the economy into a soft landing, balancing growth and inflation.

“Growth prospects are resilient, even with this latest rate rise, and growth will support the housing market,” he said. — Bernama