PETALING JAYA: The property market is expected to see healthy demand in the near-term, supported by resilient buying interest although increasing property overhang remains a growing concern.
In a note, MBSB Research said it is positive on the sector, with the Johor Baru–Singapore Rapid Transit System and Johor-Singapore Special Economic Zone as key catalysts.
The research house said total loan applications to purchase RM53bil of property grew by 17.7% year-on-year (y-o-y) in January, according to data from Bank Negara Malaysia.
However, it noted that the double-digit y-o-y loan growth was due to a lower base in January 2025 due to fewer loan applications amid the Chinese New Year holiday period.
“We expect loan applications to be weaker in February due to the festive season,” it said.
“Nevertheless, we maintain our expectation of marginal growth on buying interest in 2026.”
Additionally, approved loans reached RM22.2bil in January, with a flattish loan approval to application ratio of 41.9% against 46.3% in December last year.
Despite this, MBSB Research said there is not a major cause for concern as approval rates in January have historically normalised from a higher base in December.
Meanwhile, the earnings outlook for the sector is expected to remain steady, backed by stable prospects for property sales.
The first quarter of 2025 largely saw growth in earnings for property companies across the sector.
IOI Properties Group Bhd
recorded the highest quarterly earnings growth of 50.6% y-o-y, due to contribution from Singapore operations following acquisition of remaining 50.1% equity stake in Scottsdale Properties Pte Ltd.
S P Setia Bhd also saw an earnings surge of 360% y-o-y for the quarter, as a result of recognition of land sales with high margins.
“On a cumulative basis, all developers under our coverage reported higher earnings, driven by progress billing of ongoing projects and new sales secured,” the research house said.
“Overall, property companies are setting marginally higher new sales targets for the calendar year 2026.”
Mah Sing Group Bhd and Matrix Concepts Holdings Bhd constitute MBSB Research’s top picks for the sector.
“We remain positive on Mah Sing’s long-term prospects which will be driven by the healthy outlook for affordable homes in Malaysia,” it said.
It was also optimistic on Matrix Concepts’ long-term outlook, underpinned by sustained growth through contributions from its Sendayan and Klang Valley developments.
However, it flagged rising property overhang, particularly in key states such as Selangor and Johor as a worrying development.
Unsold completed residential properties breached the 30,000-unit mark in the fourth quarter, representing the highest level of property overhang since the previous quarter, according to the National Property Information Centre.
“The rising supply of unsold completed units can lead to stagnant property prices which does not bode well for the property sector,” the research house pointed out.
Meanwhile, it noted that oil price hikes due to geopolitical tension in the Middle East, if prolonged, could have a minor knock-on effect on the property sector, as higher cost of living and reduced disposable income may lower homebuyer affordability and affect buying interest on properties.
Furthermore, higher transport cost from increased oil price could raise construction cost of developers, it added.
