KUALA LUMPUR: Stable mortgage rates and tax reliefs are set to stimulate Malaysia’s property sector in 2025, according to Hong Leong Investment Bank (HLIB).
HLIB CEO Lee Jim Leng said government initiatives are expected to spur demand while aiding the market’s recovery by making homeownership accessible and contribute to long-term growth.
“The sector’s optimistic outlook is supported by the government’s initiatives outlined in Budget 2025. Notably, the tax reliefs of up to RM7,000 for first-time homebuyers purchasing properties priced up to RM500,000, and up to RM5,000 for homes priced between RM500,000 and RM750,000.
“These initiatives are expected to spur demand while aiding the market’s recovery,” Lee said in her opening address at 18th Bursa-HLIB Stratum focus series titled “Property Sector: Entering a New Cycle” today.
At the same time, she said, the current 3% Overnight Policy Rate and stable mortgage rates in Malaysia bode well for demand in the property sector. “These low interest rates make ownership more affordable for those looking to invest in the near future,” she added.
Lee said with a stable employment growth rate and an expected gross domestic product (GDP) growth of 4.9% for Malaysia this year, according to HLIB’s projection, the economy remains on firm ground, providing the right conditions for sustained growth in the property sector.
“At HLIB, we believe a stable employment growth rate and a projected GDP growth of 4.9% this year, the economy remains on firm ground. These positive indicators provide the right conditions for sustained growth and a virtuous cycle of demand and investment that contributes to Malaysia’s broader economic development.
“While these are promising signs, it is necessary for continued innovative strategies and collaboration within the industry to tackle the challenges,” she added.
Lee said affordability remains a key factor for the sector. She pointed out that 2025 is expected to see higher wages for civil servants and the introduction of a higher minimum wage.
“This incremental increase in disposable income is a much welcome factor in catalysing demand and raising affordability for properties across the country,” Lee said.
According to the National Property Information Centre, Malaysia’s property transaction values increased to RM105.65 billion in the first half of 2024. This marks 23.8% year-on-year growth, the highest in five years. Moreover, the Kuala Lumpur Property Index is set to rise by 31.17% in 2024.
The residential overhang situation has also improved, with a 12.3% reduction in volume of unsold properties.
However, Lee said rising living costs, inflationary pressures, and high unsold inventories continue to pose challenges for market recovery. “Amidst our optimism, we believe challenges still persist. Tackling these challenges will require collaborative effort and innovative strategies,“ she added.
