Bank Negara Malaysia’s Monetary Policy Committee (MPC) decision to increase the overnight policy rate (OPR) by 25 basis points (bps) to 2.00 percent has received a somewhat subdued response from the property sector, property analysts told Business Today.
They said that the market was reeling from the pandemic coupled with lacklustre demand in the sector partly due to the overhang and the hike in interest rate would only be a dampener.
Group Managing Director of Savills (Malaysia) Sdn Bhd, Datuk Sri Paul Khong said that the actual increase in OPR to the property market will equal more money required to service the existing loans in layman’s terms. “Either longer repayment periods on a status quo basis or a higher monthly repayment rate.,” he said
He said that it will have some nominal effect on new property buyers taking loans since the increase is 0.25% per annum only.
In a surprise move, BANK Negara Malaysia (BNM) increased the Overnight Policy Rate (OPR) by 25 basis points (bps) to 2% from the record low of 1.75% the central bank held since July 7, 2020.
BNM said that decision to hike was driven by inflationary pressures arising from the reopening of the global economy and the improvement in labour market conditions.
Throughout the Covid-19 crisis, the OPR was reduced by a cumulative 125bps to a historic low of 1.75% to provide support to the economy.
“With the domestic growth on a firmer footing, the MPC decided to begin reducing the degree of monetary accommodation. This will be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support sustainable economic growth in an environment of price stability,” the central bank statement read.
A property analyst in a stockbroking firm said that although it will increase the cost of financing, it could not have come at the worst time when the demand in the property sector was tepid.
He said that the momentum of the recovery in the sector was likely to be stymied by the hike in the rates adding that while he does not see the residential sector suffering very much the office sector is likely to take a beating.
“Many had become comfortable working from homes and the demand for the housing sector was low coupled with over-hang but the rise in the rates is certainly a dampener, “he said
On property stocks, he said that it would depend on how highly geared there are and where the property projects of the company are adding that it would have minimal impact on big property players
