PETALING JAYA: While Budget 2027 introduced several measures to support the property sector, experts say more needs to be done to address persistent challenges, including affordability and the mismatch between supply and demand in Malaysia’s real estate market.
Affordable housing developer Lagenda Properties Bhd
said a key challenge is matching new supply with what buyers can afford.
“The budget’s measures mainly support buyers, while land, construction and compliance costs continue to rise, putting pressure on prices. Over the next 12 to 18 months, it will be important to plan launches around local purchasing power and existing stock.
“This could mean a greater focus on landed and starter homes in growth areas, and a more measured pipeline in areas with high supply,” the company said in a statement to StarBiz.
JLL Malaysia managing director Jamie Tan said the biggest structural challenge remains the gap between household incomes and property prices.
“We can introduce more financing schemes and incentives for first-time buyers, but these measures will have their limits if salaries do not grow sufficiently to keep pace with the cost of housing and everyday living,” he told StarBiz.
Tan noted that Budget 2027 raised the minimum wage from RM1,700 to RM2,000, effective from June 2027.
“Data from the Statistics Department showed that close to two million Malaysian formal employees, or 28.5%, earned below RM2,000 a month in September 2025.
“However, micro, small and medium enterprises with annual sales below RM50mil are exempted from implementing the new rate, which means the impact will not be uniform across the workforce.”
Tan noted that the budget introduced a starting minimum wage of RM2,500 for semi-skilled jobs and graduates.
“These are positive steps, but the longer-term challenge is to improve productivity and create more higher-paying jobs.
“We need more forward-looking policies to upskill our existing workforce for the jobs of the future, rather than relying mainly on increases to the minimum wage.”
Tan said there is the question of how much additional income will translate into greater purchasing power for Malaysian households.
“A wage increase does not necessarily mean a household is in a better position to buy a home if transport, food, childcare and other living expenses continue to rise.
“The government should therefore look at wage growth, productivity and housing affordability together.”
CBRE | WTW group managing director Tan Ka Leong said there is a mismatch between what is being supplied and what buyers actually need.
As better-located affordable housing of around 800 sq ft becomes available at competitive prices, smaller units of 400 to 500 sq ft in suburban locations could face greater competition, particularly where connectivity and amenities are weaker.
“This does not mean small units will underperform across the board. Compact units in Kuala Lumpur and other established urban centres should remain relevant, particularly for investors, young professionals and tenants who prioritise location and accessibility.
“The broader issue is therefore not simply oversupply, but the right product in the right location at the right price. Developers will need to be more disciplined in product sizing, pricing and target-market assessment to avoid adding to unsold stock.”
Olive Tree Property Consultants founder and chief executive officer Samuel Tan echoed the sentiment that there is a supply-demand mismatch.
“Subsidised demand sits below RM500,000, while much private launch activity targets higher price points and locations far from jobs and transit.
“Developers also face cost pressure. Industry players have said more must be done on rising development costs. Without relief, affordable launches become less viable, which tightens the very segment the budget supports,” Samuel stated.
JLL Malaysia’s Tan believes there is a need to change the mindset around homeownership.
“Buying a house should not be the only measure of financial security, particularly for younger people entering the workforce.
“Many young people nowadays are more mobile and are open to working overseas or moving between cities for career opportunities.”
Tan said for many young people today, renting can provide greater flexibility while allowing them to build up their savings, before committing to a mortgage.
“We should be making rental housing a more viable and secure option, rather than treating it simply as a temporary arrangement for people who cannot afford to buy.”
Greenhill & Mason Sdn Bhd managing director Ruben Ke lvin echoed this, and opined that Malaysia’s rent-to-own (RTO) housing scheme should be redesigned to create a regulated matching platform for overhang stock – with neighbourhood revitalisation as an explicit outcome.
“Malaysia already has a RTO infrastructure, which was introduced in Budget 2020. However, the programme underdelivered because rental rates were close to market and qualifying criteria were too restrictive.”
Ruben believes that a “redesign” should target the middle 40% income group (M40) specifically.
“There should be a centralised government-intermediated platform that matches developers holding unsold mid-tier properties – concentrated in the RM300,000–RM700,000 band – with qualified M40 buyers under a regulated RTO framework.
“This resolves two problems at once – it clears developer overhang and creates a genuine long-term asset-ownership pathway for households who are creditworthy, but cannot front a full down payment.”
Ruben said the RTO scheme would greatly benefit the secondary property market.
“The secondary market benefit here is underappreciated. When a RTO buyer commits to a unit in an established township – say, a five-year-old development in Seremban or Shah Alam — they tend to invest in that unit. They renovate, they maintain, they put down roots.
“That reinvestment activity upgrades the surrounding properties, improves the streetscape, reduces vacancy rates and raises transactable values across the entire neighbourhood. This is how the secondary market self-reinforces.”
The alternative, said Ruben, is to leave those units empty on a developer’s balance sheet — while the township sits half-occupied.
“This actively suppresses neighbourhood value and makes adjacent properties harder to sell or refinance.”
With housing affordability a persistent issue in Malaysia, JLL Malaysia’s Tan believes that the focus “should not” just be on exclusively helping people to buy a home.
He strongly advocates initiatives that enable people to rent decent homes at affordable rates until they can afford to buy a property, should they choose to do so.
“In fact, many young households may prefer to rent first, particularly when they are still building their careers or are uncertain about where they want to settle for the long term.
“A stronger rental market would give them greater flexibility while helping to meet housing needs in the short and medium terms.”
LL Malaysia’s Tan said this requires more than just increasing the supply of private rental units.
“We should look at ways to encourage institutional investment in professionally managed rental housing, including affordable rental homes and co-living arrangements.”
Tan said a recurring tax incentive linked to projects offering units for rent within an agreed affordable rental band could be considered.
“The incentive should continue only for as long as the units remain affordable, with clear eligibility criteria and safeguards to ensure that the public support (measure) delivers genuine benefit to the public.”
