Loan applications data remains stable in August, indicating that demand for property was unaffected by the overnight policy rate hike, as it was supported by the reopening of the economy, a research house said.
Citing the data released by Bank Negara Malaysia, MIDF Research said property loan applications recovered in August 2022, increasing to RM53.4 billion or 4.5% m-o-m after declining by 12.5% m-o-m in July.
It said on a yearly basis, property loan applications surged by 66.1% y-o-y in August due to the low base effect caused by the lockdown imposed in August 2021.
The research house said the total loan approved for the purchase of property increased marginally to RM23.3 billion or 2.4% m-o-m in August 2022, reversing from the decline of 9.0% m-o-m in July, mainly due to higher property loan applications.
On a yearly basis, the total property loan approved during the month surged by 93% y-o-y, attributed to the low base in August 2021 and the improved percentage of total approved loans over the total applied loans of 43.6% in August 2022 against 37.5% in August 2021.
“Overall, the higher approved loans is in line with our expectation of marginal recovery in new property sales for property developers,” it said.
Citing the data released by National Property Information Centre, it said the residential overhang units eased to 34,092 units in Q2 2022 from 35,592 units in Q1 2022, attributed to the reopening of the economy.
“Although the residential overhang is showing signs of easing, we see that the property market may still be partly weighed down by the lingering high overhang issues as residential overhang units remain high in Q2 2022, staying above 30,000 units,” it added.
As such, MIDF has maintained its “neutral” call on the property sector, naming Mah Sing Group Bhd as its top pick for the sector with a target price of RM0.74 per share, and IOI Properties Group Bhd, maintaining its “buy” call with a target price of RM1.29 per share.