Malaysia Property: On stable ground

• Resilient domestic demand to underpin 2026 property sector growth momentum
• Robust labour market and income-related policy measures to sustain steady demand
• Supply overhang remains under control

Steady growth

Malaysia's 3Q25 property sector demonstrated healthy growth momentum (+10% q-o-q, -3% y-o-y) despite elevated tariff-induced economic slowdown concerns during the quarter. This is in line with stronger-than-expected 3Q25 GDP growth of 5.2% y-o-y, thanks to the robust domestic demand and positive net exports. Notably, the commerical and industrial properties segment were the standout performers, registering a robust 13% and 11% q-o-q increase respectively in 3Q25 transactions as record-high approved investments in 2021-2024 continue to be implemented. We believe the overall property market will continue to exhibit resilient underlying strength in 2026,  in tandem with stable household spending and investment activities.

Supportive Budget 2026

Budget 2026 continues to promote housing affordability with financial/tax incentives which will in turn help sustain resilient property demand. Specifically, the government will double the financing guarantee for first-time homebuyers to RM20bn from RM10bn enable more gig workers and self-employed individuals to own homes and extend the full exemption of stamp duty on first home below RM500k until 2027. Furthermore, the proposed increase in financial assistance in 2026 under Sumbangan Tunai Rahmah and Sumbangan Asas Rumah programs to RM15bn from RM13bn as well as the 7% salary increase for civil servants under Phase 2 of the Public Service Remuneration System are expected to contribute to a healthy housing demand in 2026.

Overhang concerns

3Q25 overhang for residential and high-rise properties grew by +5% q-o-q and +12% y-o-y, marking the second successive quarterly increase since the lows in 1Q25. We are not unduly worried as this largely reflects the aggressive project launches over the past three years to capture the long-overdue sector recovery since 2022. We believe this nascent uptick is not a material risk at this juncture, considering the sustained expansion in the labour market as unemployment rate dipped to a 10-year low of 3.0% in September 2025 with historic high labour force participation rate. Meanwhile, the proportion of unsold units to overall residential inventory remains below pre-pandemic levels, indicating healthy supply conditions.

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