Malaysian house prices to rise in 2023, but the number of real estate loan applications has increased

Property developers expect house prices to rise in 2023 and by an average of 17% in the first half of 2022 due to the rising cost of doing business in Malaysia.

At the same time, the data points to loan application statistics for August indicating that real estate demand continues to be unaffected by the increase in the overnight policy rate (OPR).

Most developers provided some clues as to how much more expensive their new launches will sell for. This is not a low amount,” Malaysian Real Estate and Housing Developers Association (REHDA) president Dato’ NK Tong told New Straits Times.

REHDA’s real estate industry survey showed that 82% of respondents said their cash flow was affected by the rising cost of doing business.

The main cost factors affecting 1H 2022 cash flow are land costs, labour costs, compliance costs and longer approval times.

Looking ahead, respondents expect construction costs to increase by an average of 18% in 1H 2022 and beyond, which could in turn impact home prices.
Loan application statistics for August indicate that real estate demand continues to be unaffected by policy rate hikes, the data said.

According to the New Straits Times, the firm was referring to data from Bank Negara Malaysia (BNM), which showed that total loans for property acquisitions rose 4.5 percent year-on-year to RM53.4 billion in August.

On a year-on-year basis, the number of real estate loan applications rose by 66.1 percent due to the lower base impact of the August 2021 blockade.

Total loans approved for property purchase in August grew by 2.4% YoY and 93% YoY to RM23.3 billion.

Overall, the higher loan approvals are in line with our expectation of a marginal recovery in new property sales by property developers. We also see loans for property purchases in August 2022 in line with our expectation for a marginal recovery in the sector

“Nonetheless, we maintain our ‘neutral’ rating on the real estate sector as the housing glut remains high in the second quarter of 2022,” it added.

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