Loan application data from Bank Negara Malaysia shows that buying interest on property remains encouraging. Loan application for purchase of property grew by +23%yoy to RM54b in October 2023 after encouraging growth of +15.7%yoy in
September 2023. Cumulatively, loan application for purchase of property in 10MCY23 was higher at RM512b (+4.4%yoy).
MIDF says it sees that the stronger loan application is positive to the sector as it indicates stronger buying interest on property. Looking ahead, the house believes that demand for property will be stronger in CY24 due to improving property landscape in Malaysia. According to data from NAPIC, serviced apartment overhang improved in 3QCY23 with lower total serviced apartment overhang of 22,152 units against 22,497 units in 2QCY23. The improvement in serviced apartment overhang was mainly led by the lower overhang units in Johor
BNM maintained OPR at 3% in November 2023, September 2023 and July 2023. The unchanged OPR is supportive to the recovery of property sector as buying interest will stay supported. Recall that property market was hit by four consecutive OPR hikes in 2022 which hurt buying interest on properties due to increase in monthly instalment.
Meanwhile, MIDF thinks that OPR of 3% will remain accommodative and supportive to the growth of property sector. Looking
ahead, our economist expects BNM to maintain OPR at 3% in 2024. The expectation of unchanged OPR should continue to
support recovery of property sector.
The house is maintaining its POSITIVE stance on property sector as outlook is underpinned by improving overhang situation in residential and serviced apartment. Besides, the unchanged OPR should continue to support recovery of property sector.
Top picks for the sector are Mah Sing Group and Matrix Concepts as MIDF thinks that property developers that focus on affordable home should see robust new sales as demand for affordable homes is resilient. The house also likes Sunway Berhad due to improving outlook for Iskandar Malaysia while listing of Sunway Healthcare by 2027 should provide catalyst
