ACCORDING to data released by Bank Negara Malaysia (BNM), total loan application for purchase of property was flattish in May 2025, growing by a marginal +0.4% month-on-month (mom) to RM56.4 bil after growth of +3.1% mom in April 2025.
On yearly basis, total loan application was lower by -3.6% year-on-year (yoy) in May 2025 after registering three consecutive increases in February 2025 to April 2025.
Despite the temporary blip in the loan application in May 2025, cumulative loan application in the five month of calendar year (5MCY25) remains higher at RM259.4 bil (+1.9%yoy).
“The higher loan application is in line with our expectation of stronger buying demand for properties in Malaysia which is underpinned by stable house price outlook and better economic prospect,” said MIDF Research.
Besides, the recent overnight policy rate (OPR) cut by BNM is expected to lift demand for properties.
Approved loan for purchase of property increased by +5% mom in May 2025 after an increase of +6.8%mom in April 2025.
The higher approved loan was mainly driven by higher loan approval ratio of 46.4% in May 2025 against 44.3% in April 2025.
On yearly basis, approved loan climbed by a marginal +0.8%yoy in May 2025 despite lower loan application due to higher loan approval ratio of 46.4% from 44.6% in May 2024.
Cumulatively, total approved loan in 5MCY25 was unchanged at RM110.9 bil. We expect that total approved loan to be marginally stronger in the coming months as loan application is expected to remain resilient.
According to data released by National Property Information Centre (NAPIC), residential overhang in Malaysia increased for second consecutive quarters, inching up marginally to 23,515 units in quarter one of calendar year 2025 (1QCY25) from 23,149 units in 4QCY24.
We are not overly concern on the higher residential overhang in 1QCY25 as it was mainly contributed to higher figures from Sabah which increased to 2,054 units in 1QCY25 from 1,524 units in 4QCY24.
While KL remains the top contributor to residential overhang at 3,668 units in 1QCY25, the residential overhang in KL has improved from 4,234 units in 4QCY24.
Meanwhile, Johor has the second highest number of residential overhangs at 3,034 units in 1QCY25, increasing marginally from 2,964 units in 4QCY24.
Next, Perak has the third highest number of residential overhangs at 2,964 units in 1QCY25, up from 2,844 units in 4QCY24.
BNM announced OPR cut by 25bps to 2.75% on 9th July 2025 which we think is slightly positive to property sector.
We expect the OPR cut to improve home affordability marginally by reducing borrowing costs and improving loan eligibility.
Besides, the OPR cut is expected to bring interest savings for developers which are estimated at below 2% of earnings of developers.
We see that the OPR cut to improve buying sentiment on property in Malaysia and benefit property developers particularly middle-end housing developers. Overall, we think that the OPR cut increases optimism on property sector.
We remain sanguine on property sector as we see healthy buying interest on property in 2HCY25 while JS-SEZ and The Johor Bahru–Singapore Rapid Transit System (RTS) remain the catalysts to the sector.
The recent OPR cut will further lift buying sentiment on property. Hence, we maintain our Positive stance on the sector. —July 16, 2025
Main image: The Star
