PETALING JAYA: Property developers will likely be heading into a bumpier stretch, as rising cost pressures start to bite more visibly in the coming quarters while buyer sentiment shows signs of cooling.
MBSB Research foresees earnings outlook to be “slightly subdued” going forward as cost pressures are expected to become more apparent.
In the first quarter of financial year 2026 (1Q26), earnings of property companies were already mixed, with three companies under MBSB Research’s coverage reporting earnings growth while three companies reported earnings decline.
“Overall, 1Q26 earnings of developers were somewhat softer than expected which was partly dragged by the narrowing margin,” the research house said.
On property buying sentiment, MBSB Research said it is “slightly less sanguine” going forward as buying sentiment may moderate amid inflationary pressures.
That said, it was quick to note that overall buying sentiment is holding up well as Malaysia still maintains fuel subsidies for RON95 petrol and the logistics sectors.
Meanwhile, the country saw an uptick in loan applications in April 2026.
Higher approved loans were also seen in the month, albeit lower approval rate.
Total loan application for purchase of property increased to RM62.8bil or 15.9% month-on-month (m-o-m) in April 2026 as loan applications picked up from weaker levels seen in March due to the Hari Raya festive season.
On a year-on-year (y-o-y) basis, loan application was higher by 11.8% in April 2026 following a marginal decline of 0.5% y-o-y in March 2026.
Cumulatively, total loan application in the first four months of 2026 (4M26) was marginally higher at RM206.6bil, higher by 1.8% y-o-y.
Meanwhile, approved loan for purchase of property increased to RM26.9bil or by 22.4% m-o-m in April 2026, underpinned by the increase in loan application.
On a y-o-y basis, approved loans were also higher by 8.3% in April 2026 due to higher loan application albeit loan approval rate declined to 40.6% in April 2026 from 44.3% in April 2025.
“We reckon the lower approval rate could be due to banks adopting a stringent stance amid geopolitical tensions.
“Total approved loans in 4M26 were marginally higher at RM86.9bil or up by 2.5% y-o-y,” it added.
With the expectation of a moderating buying sentiment and cost pressure weighing on earnings in second half of the year, MBSB Research has maintained its “neutral” stance on the property sector.
