- Strong 1H26 economic growth underpins resilient property demand
- Rising residential supply overhang to intensify competition for mass-marketing housing
- Positive spillovers from sustained investment activities
Resilient property demand
Malaysia's strong 2Q26 GDP growth of 6% provided a supportive backdrop for the property market underpinned by sustained household income growth and healthy labour market conditions. While 2Q26 property volume was relatively muted (-1% y-o-y, +8% q-o-q), property credit demand remained healthy as loans for residential property and non-residential property grew 5.4% and 7.8% respectively in Jul 2026 (vs total loan growth of 5.6%). Notably, total property loan applications reached the highest monthly level for this year in Jul 2026 at RM62.9bn (+1% y-o-y, +11% m-o-m), suggesting that underlying property demand remained resilient as concerns over Middle East geopolitical tensions eased.
Intensifying competition for mass-marketing housing
2Q26 overhang for residential properties grew +1% q--o-q and +23% y-o-y, extending the successive quarterly increases recorded since the 2024 lows. It is noteworthy that unsold properties below RM500k have trended higher, accounting for 65% of unsold residential units from 52% in 2Q23. The shift highlights the mounting headwinds facing the mass-market housing sector, driven by intense competition and dampened consumer sentiment. In stark contrast, the premium housing market continues to enjoy stronger take-up, buoyed by expanding affluent demographics.
Tailwinds from industrial revitalisation
Malaysia's approved investments increased by 11.7% y-o-y to RM218.5bn in 1H26. Continued investments in data centres, manufacturing, logistics, infrastructure and other high-value industries are expected to generate positive spillovers for industrial and commercial property demand. In 2Q26, large listed developers continued to record relatively healthy property sales, with most remaining confident of achieving their full-year sales targets. Overall, we expect Malaysia's property demand to remain supported by a healthy economic landscape, with developers holding sizeable industrial landbanks best positioned to benefit.
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