Bank Negara Malaysia (BNM) observed a moderate growth in house prices at 4% in the first half of 2018, with initial data for Q3 2018 showing a further moderation to 1.1%. 

The easing in home price growth mirrored the weaker demand for properties within the higher-priced segments, which remained beyond the reach of most buyers, as well as the subdued activity within the housing market in the past six years, reported The Star.

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“This is contributing to adjustments in housing supply towards more affordable segments in the past two years with an increasing share of new housing launches targeting properties priced below RM500,000,” said the bank in its Financial Stability and Payment Systems Report 2018 released on Wednesday (27 March).

Despite fewer launches of new homes from January to September 2018, increased activity in this price segment at key states supported a marginal hike in the total housing transaction volumes.

Over at other states, home prices at this level remain unaffordable – contributing to the further increase in the unsold housing stock by 22.5% in the nine months to September 2018.

“Despite this, a large and broad-based decline in house prices which could increase risks of a disorderly correction in the housing market is not expected for several reasons,” said BNM.

Broad house price movements are primarily driven by landed residential property transactions (76% of MHPI weightage) which continue to witness firm demand.

Housing demand is also expected to be supported by the continued growth in income as well as the formation of new households.

“Affordability remains an issue in the residential property market, while oversupply of office and retail space persists in the non-residential property market,” noted the bank.

“Houses priced above RM250,000 continued to form the bulk of new launches and total unsold housing units, adding to the housing supply and demand mismatch in some locations.”

But with firm demand “for affordable homes continuing to outstrip new supply in the foreseeable future, coupled with measures to improve financing affordability”, BNM expects the housing market’s outlook to “gradually improve along with greater alignment between demand and supply conditions”.

Meanwhile, BNM’s exposure to the local property market (RM901.30 billion) rose at a slower rate of 5.9% in 2018 from 7.1% in 2017, with end-financing for residential properties being the biggest contributor to growth.

Loan applications largely consisted of loans for houses valued below RM500,000, while first-time home buyers accounted for 69% of borrowers of total home loan borrowers.

“Despite higher level of unsold properties, eligible first-time home buyers continued to have access to house financing,” said BNM.


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