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New Straits Times
08-05-2025
- Business
- New Straits Times
OPR decision looms large over property market
KUALA LUMPUR: The decision on the overnight policy rate (OPR) is more than just a routine monetary move — it could significantly reshape the property market. For developers, the direction of the rate will determine the cost of financing new projects. For homebuyers, especially first-time buyers, it could mean the difference between affording a home or being priced out. If the Monetary Policy Committee maintained the rate, developers could plan projects confidently, especially in key urban centres like Kuala Lumpur and Johor Bahru, according to Dr Muhammad Najib Razali, an associate professor in property economics and finance at Universiti Teknologi Malaysia. He said the steady rate has already contributed to a rise in residential construction, with housing starts increasing over 20 per cent year-on-year in 2024. For homebuyers, Najib said a stable OPR helps keep mortgage rates predictable, supporting affordability and purchasing power, especially for first-time buyers and those with variable-rate loans. However, he warned that these trends mask deeper structural problems, with the core issue being that much of the new housing supply remains priced beyond the reach of average Malaysians. Even if rates stay low, he said affordability is hampered by upfront costs, loan eligibility barriers and a persistent mismatch between available units and what they can afford. "If the central bank decides to cut the OPR, borrowing costs would decrease, which could provide a temporary boost by making mortgages cheaper and potentially encouraging more purchases in the affordable segment. "Developers, in turn, could take advantage of cheaper financing to invest in affordable housing projects — but only if demand signals and government incentives align," he said. On the flip side, Najib said the affordable housing issue could worsen if the rate is increased, as it could raise borrowing costs for both developers and homebuyers, reducing affordability across all price segments. Compounding this, he stated that the external pressures, such as trade wars and global economic uncertainties, could push Bank Negara toward a more accommodative policy stance to protect the country's economy. He said such a move would aim to stimulate domestic demand and safeguard sectors like property from external shocks. While the OPR plays a crucial role in shaping financing conditions, Najib said it is not a silver bullet for Malaysia's affordable housing issue. "Addressing that challenge requires a combination of monetary policy, targeted government programmes, regulatory incentives and private sector commitment to deliver housing that meets the needs of the underserved population. "Regardless of the OPR outcome, stakeholders must stay attuned not only to interest rate movements but also to the broader structural issues in the housing market that affect long-term affordability and accessibility," he added. Juwai IQI co-founder and group chief executive officer Kashif Ansari said an interest rate hike could discourage new development activity, while a steady or lower rate would support both supply planning and homebuyer affordability. He also noted that a single change to the rate may not shift the property market overnight but it offers a clear signal of the central bank's policy direction. "If the rate holds or drops, it's a green light for continued confidence. It suggests inflation is under control and growth is still a priority," he said. Amid rising global economic uncertainty fuelled by escalating US-driven trade tensions, Ansari said it is not yet the right time to cut the OPR. "The threats of tariffs and trade wars are still just that — threats. Bank Negara's policy decisions are grounded in empirical data rather than media headlines," he added. Right now, Malaysia has stable growth, manageable inflation, and steady employment. There's no urgent need to cut." Ansari noted that the country currently enjoys stable economic growth, manageable inflation and steady employment, indicating there is no urgent need to cut the interest rate. However, he said that change could come later this year if warranted by conditions such as slowing economic growth or a rising unemployment rate. Meanwhile, CCO & Associates (KL) Sdn Bhd executive director Chan Wai Seen emphasised the urgent need for Malaysia to bolster domestic consumption in light of growing global trade uncertainties driven by US tariffs. He suggested that a reduction in the rate could be a timely and effective measure to stimulate the economy, noting that the inflation rate remains at a manageable level, offering room for monetary easing. "The reduction in the OPR will positively benefit the economy, including the property market. The loan monthly loan instalments will reduce, allowing surplus cash to be injected into the market. This augurs well for the retail as well as the hospitality sectors. "Lower monthly loan instalments will improve the loan eligibility of the prospective buyers. This will increase the demand for properties in the primary or the secondary property market," Chan said.
The Sun
03-05-2025
- Business
- The Sun
Malaysia hotspot for rich property investors from China
PETALING JAYA: Malaysia's luxury property market is attracting interest from Chinese high-net-worth individuals, with momentum expected to accelerate into 2025 and beyond. The country now ranks fourth, behind Thailand, Australia and Canada, as a major destination for affluent Chinese buyers seeking upscale homes priced from RM22 million and above. Universiti Teknologi Malaysia Property Economics and Finance associate professor Dr Muhammad Najib Razali said Malaysia's solid economic fundamentals, including steady GDP growth, robust domestic consumption and a dynamic services sector, make it an increasingly appealing investment haven. 'Infrastructure development is another major driver supporting the optimistic outlook. Projects like the Tun Razak Exchange, set to be Southeast Asia's next financial hub, and ongoing upgrades to transport networks and urban amenities are transforming Kuala Lumpur into a more competitive global city.' He said the proposed high-speed rail link to Singapore, once finalised, would significantly enhance regional integration and boost demand in Kuala Lumpur and southern Johor. Muhammad Najib said Malaysia's luxury real estate offers some of the best value in Asia. 'In Kuala Lumpur, luxury condos average between RM1,900 and RM3,800 per sq ft, with the most premium developments reaching RM5,700, still considerably lower than in cities like Singapore or Hong Kong.' For example, RM4.75 million can secure a 1,500 to 2,000sq ft property in Kuala Lumpur as opposed to a 400 to 500sq ft one in Hong Kong. He said the country's strong education sector is another major pull factor. 'With over 44,000 Chinese students currently enrolled in Malaysian institutions, families often invest in property near education hubs such as Mont Kiara and Subang Jaya. 'These buyers see real estate not only as housing but also as a long-term asset tied to accessible, globally-recognised education.' He said demand is particularly high in prime locations such as Kuala Lumpur City Centre, Bangsar, Bukit Damansara and Kenny Hills where luxury condos, villas and gated communities match the expectations of international buyers. Muhammad Najib said property agents specialising in the luxury segment have reported not only rising enquiry volumes but also higher conversion rates, with more enquiries turning into purchases. 'In fact, we're seeing group viewings, multiple families or investor circles travelling together, making swift decisions when properties tick all the boxes.' High-rise condominiums and serviced residences have emerged as firm favourites among wealthy Chinese. He said while Kuala Lumpur remains the primary focus, interest is also growing in Johor Bahru, especially in large-scale projects like Forest City. 'They view Malaysia's luxury property market as a 'buy low now, appreciate later' opportunity. The country's global profile is rising with megaprojects, and the value proposition here is hard to beat compared with other Asian cities.' He said government incentives have also helped fuel interest, particularly the Malaysia My Second Home (MM2H) programme, which despite tighter conditions, continues to offer long-term residency. 'Malaysia's property ownership laws are relatively foreigner-friendly. Freehold titles are available in many projects, unlike in Thailand or Indonesia, where rules are more restrictive. 'Although the revised MM2H requirements, such as a RM40,000 monthly income and RM1 million fixed deposit, initially deterred some, they've since positioned Malaysia as a premium option for serious investors seeking a stable second home.'
