Malaysia’s property market maintained its healthy trajectory in 3Q23 as residential property transaction grew 6% y-o-y and 12.0% q-o-q to 68.7k units – the highest quarterly volume since 2012. Sequentially, residential property loans grew by 7.2% (vs 6.8% in 2Q23), reflecting the resilient demand for residential properties. Meanwhile, 3Q23 house price index y-o-y growth was flattish at 0.1%, compared to 4.3% in 2Q23.
Residential overhang has continued to ease in 3Q23, registering 25,311 units (-14% y-o-y, -4% q-o-q) which is the lowest since 2017. More importantly, the improvement in overhang has also been witnessed in the high-rise segment, though it remains elevated by historical standards. We believe that the favourable economic outlook under the Madani Economy Framework will lead to a better supply-demand dynamics, resulting in lower overhang units.
Bursa-listed large developers generally recorded commendable sales performance in 3Q23, especially in the landed properties segment where booking pipeline remained strong. Given the robust employment market with record high labour participation and better income growth prospects in 2024, Malaysia’s property sector is likely to maintain its gradual recovery momentum.
The government has planned several major rail infrastructure projects such as MRT3, Penang LRT, Johor LRT and KL-SG HSR which will be a strong catalyst for Malaysia’s property sector. Taking cue from the spillover effects of the on-going JB-SG RTS, we believe Malaysia’s property sector will continue to do well in the nearto- medium term. Landed properties remain the bright spot in the property market due to a balanced supply demand dynamics. We believe township developers such as Eco World, Sime Darby Property and IOI Properties could be the largest beneficiaries of the sustained recovery for landed properties.