With the Budget 2027 set for unveiling this Friday, one major sector that will be closely watched will the property. Amid a slowdown as indicated in the number of housing loans approved, developers and house buyers are in anticipatory mode expecting some good news from the Prime Minister.
Amid this backdrop, MBSB Research has maintained its NEUTRAL stance on the sector as softer loan demand, tighter approvals and a growing stock of unsold properties point to a more challenging market outlook.
The research house said applications for property purchase loans fell 4.0% year-on-year to RM58.4 billion in August 2026, marking the first annual decline in five months. On a monthly basis, applications dropped 7.2%.
For the first eight months of 2026, however, total applications were still marginally higher by 1.3% year-on-year at RM440.8 billion, suggesting overall buying sentiment remains relatively stable despite higher living costs and cautious consumer behaviour.
Approved property loans showed a weaker trend, falling 13.1% year-on-year and 12.4% month-on-month to RM23.8 billion in August.
The loan approval ratio also declined to 40.8%, from 45.0% a year earlier and 43.2% in July, which MBSB said indicates banks have become more cautious in granting financing.
Cumulatively, approved loans fell 1.5% year-on-year to RM185.8 billion in the first eight months of 2026.
Property Overhang Continues To Rise
MBSB highlighted rising unsold inventory as another key risk.
According to National Property Information Centre data cited by the research house, the number of unsold completed residential units rose for a seventh consecutive quarter to 33,094 units in 2Q26, from 32,801 units in 1Q26 and 26,911 units a year earlier.
Johor recorded the highest residential overhang in 1H26 at 4,222 units, followed by Selangor at 4,185 units and Perak at 4,075 units.
Serviced apartment overhang also increased sharply to 23,375 units in 2Q26, from 19,263 units in the previous quarter, driven mainly by Kuala Lumpur and Selangor.
MBSB said the growing stock of unsold units could limit developers’ pricing power, slow sales momentum and reduce appetite for new launches.
The research house has consequently applied wider discounts to revised net asset values across property stocks under its coverage to reflect a softer market environment.
MBSB retained Matrix Concepts Holdings Bhd and Mah Sing Group Bhd as its top picks, with BUY calls and target prices of RM1.33 and RM1.15, respectively.
It cited Matrix Concepts’ MVV City development and attractive 6.7% dividend yield, while Mah Sing’s earnings are supported by its M Series projects, growing industrial property exposure and potential land monetisation at Southville City.
