PETALING JAYA: The property sector is treading through choppy waters as rising construction costs, tight end-financing, and broader economic headwinds continue to squeeze developers, according to the Real Estate and Housing Developers’ Association (Rehda) Malaysia.
Its president Datuk Zaini Yusoff said property developers surveyed by the association expect sales performance to remain challenging in the second half of financial year 2026 (2H26), with a sizeable proportion holding cautious views.
However, the outlook for 1H27 appears more balanced, although neutral sentiments remain dominant.
Zaini was presenting the Rehda Property Industry Survey for 1H26 and Market Outlook for 2H26 and 1H27 yesterday.
Despite stable sales, he said operating conditions remain arduous.
A striking 81% of respondents reported higher overall business costs, while 63% faced construction-related challenges, mainly driven by volatile building material prices and labour shortages.
“To mitigate high construction costs, developers have responded by reducing profit margins, negotiating contracts, and, when necessary, increasing selling prices.
“In some cases, delaying planned launches. These measures show that cost pressures cannot be absorbed indefinitely without affecting housing prices,” he said.
Respondents logged an average 13% surge in construction costs between March and June 2026, fuelled by global geopolitical instability and rising fuel prices.
The survey, conducted by the Rehda Institute, drew responses from 181 Rehda members across Peninsular Malaysia to assess industry performance in 1H26 as well as the outlook for the subsequent 12 months.
A total of 15,834 units were launched in 1H26, virtually unchanged from the 15,841 units recorded in 2H25.
Of these new launches, 53% were priced between RM300,001 and RM500,000, located primarily in Perak, Pahang and Negri Sembilan.
Sales performance registered a minor uptick to 5,260 units, a 3.2% increase from 5,098 units in 2H25, lifting the overall take-up rate marginally to 33.2%.
Apartments and condominiums led the sales tally with 3,032 units sold, followed by serviced residences with 1,114 units and multi-storey terrace houses with 610 units.
“For 1H27, the market still remains cautious, due to the uncertainty of the ongoing war and geopolitical reasons, but as developers, we cannot stop property launches.
“Housing is a need, people need to have a roof over their heads. We are quite optimistic that the market will turn around if this incident is tackled by this year.
“So we remain optimistic the market will bounce back,” Zaini said.
End-financing constraints continue to be a primary dealbreaker, contributing directly to unsold inventory.
Up to 59% of respondents reported holding unsold completed residential units as of June 30, 2026, citing loan rejections, high price points, and unreleased bumiputra units as core drivers.
Income eligibility gaps and low margins of financing remain the top reasons for loan denials.
“It is one of our budget wishlists also for the government to consider the Housing Credit Guarantee Scheme to ease especially for affordable home buyers, as people in this category don’t have a standard income.
“We have mentioned to the Housing and Local Government Ministry, and hopefully it will be implemented in the budget to ease their buying power,” he said.
Looking ahead, 63% of respondents expect their companies to freeze hiring between July 2026 and June 2027.
In addition, 56% indicated plans to expand their land banks during the same period, suggesting that while developers remained cautious in their immediate operations, investment in longer-term development opportunities continues.
