MBSB Research maintained its NEUTRAL stance on Malaysia’s property sector as housing demand remained relatively stable, although persistent inflation and higher household expenses are expected to keep buyers cautious and limit near-term sales momentum.
The research house said property loan applications rebounded strongly in July 2026, rising 11.2% month-on-month to RM62.9 billion, following marginal growth of 0.1% in June.
MBSB attributed the improvement largely to a normalisation in application activity following disruptions from school and public holidays in May and June.
On a year-on-year basis, however, property loan applications were almost unchanged, increasing just 0.6% in July, compared with 7.8% growth in June.
This brought cumulative property loan applications for the first seven months of 2026 to RM382.5 billion, up 2.2% year-on-year.
“Overall, property demand remains on a relatively stable footing, though consumers remain cautious amid the current cost environment,” MBSB said, adding that lingering inflationary pressures could continue to temper buying sentiment.
Approved Loans Reach RM27.1 Billion
Approved property loans similarly recovered in July, increasing 12.8% month-on-month to RM27.1 billion, after growing just 0.1% in June.
The loan approval rate remained relatively stable at about 43%.
Compared with a year earlier, however, approved loans fell 3.3%, mainly because the approval ratio declined to 43.2% from 44.9% in July 2025.
Cumulatively, approved property loans amounted to RM162 billion in the first seven months of 2026, up just 0.4% year-on-year.
MBSB said the relatively flat approval trend points to a subdued near-term outlook for developers’ new property sales.
Developers Deliver Mixed Earnings
The latest corporate earnings season also presented a mixed picture for property developers.
Of the seven property companies under MBSB’s coverage, four reported results within expectations, one exceeded forecasts and two missed estimates.
IOI Properties Group Bhd was the standout performer, with earnings exceeding expectations following the recognition of land sales in Ampang.
In contrast, S P Setia Bhd and UOA Development Bhd missed expectations due to margin contraction during the first half of 2026.
More broadly, developers recorded stronger sequential earnings as progress billings picked up following a quieter first quarter. Property sales similarly accelerated in the second quarter after softer activity during the festive period in 1Q26.
MBSB said profitability nevertheless remained uneven, with some developers benefiting from land-sale gains while others continued to contend with margin compression and operational challenges.
Matrix Concepts, IOI Properties And Mah Sing Top Picks
Despite relatively healthy project pipelines and unbilled sales providing earnings visibility, MBSB sees a lack of strong immediate catalysts capable of driving a broad sector re-rating.
It therefore maintained its NEUTRAL recommendation, with Matrix Concepts Holdings Bhd, IOI Properties Group and Mah Sing Group Bhd as its preferred exposures.
MBSB has a BUY call and RM1.55 target price on Matrix Concepts, citing MVV City as an important near-term catalyst. Contributions from its Sendayan and Klang Valley developments are also expected to provide a stable earnings base, while the stock offers an estimated dividend yield of about 6%.
For IOI Properties, MBSB maintained a BUY recommendation with a RM4.64 target price, supported by its land monetisation prospects. The proposed listing of IOIPG REIT is also expected to help reduce the developer’s net gearing from the relatively elevated 0.89 times recorded in 4QFY26.
MBSB also has a BUY call on Mah Sing with a RM1.40 target price, citing a healthy earnings outlook supported by progressive revenue recognition from strong sales of its M Series developments.
While developers continue to benefit from healthy pipelines and unbilled sales, MBSB said pressure on household purchasing power remains a key constraint, suggesting Malaysia’s property market is likely to see measured rather than aggressive demand growth in the near term.
