Real Estate Trends & Property Market Insights For Malaysia

Understanding real estate trends is key to navigating Malaysia's property market. The deceleration of the Chinese economy and decreased external demand have had a moderating effect on Malaysia's economic growth, influencing buyer sentiment and activity. 

In the Q4 of 2023, the Sale Demand Index registered a quarter-on-quarter decline of 7.4%, highlighting the impact of these economic factors on buyer sentiment. Despite this, the average listing prices of homes saw a modest 1.8% rise, reflecting cautious optimism among sellers. What does this mean for the future of Malaysia’s property market? This article uncovers future property market trends in Malaysia, providing insights into the dynamics shaping the real estate market and offering valuable insights for investors and stakeholders.

Property Market Insights Source: DataSense

The insights presented in this article are derived using data from DataSense, a leading real estate data platform by PropertyGuru for Business that procures and processes data from trusted sources. By leveraging the power of data analytics and predictive modelling, DataSense unveils critical real estate trends in Malaysia, providing stakeholders with the information needed to make informed and confident decisions in the property market.

Trend 1: Housing Affordability Concerns Causing a Pivot to Rental

Housing affordability has emerged as a significant concern among property seekers in Malaysia, as anticipated in the 2023 Property Market Outlook Report. The ongoing trend of high home prices and elevated interest rates have posed obstacles to homeownership, leading to a decrease in the number of property seekers. Conversely, the demand index for rentals has been on an upward trend since the third quarter of 2023, as these prospective buyers shift their focus to the rental market after being priced out of buying a property.

However, it is currently premature to witness developers offering Built-To-Rent projects, as this option requires more time to realise returns and financial institutions remain cautious about lending to such projects in the current high-interest rate environment. With government assistance plans in place, the pace of growth in demand for rental properties is likely to moderate.

DataSense Analysis

Looking at the Demand Analytics for rental properties across Malaysia, we can see the highest PropertyGuru Market Index (PGMI) growth in Kuala Lumpur, Selangor, Penang and Johor. PGMI is based on the demand-to-supply ratio of weighted visitors divided by unique listings. This is determined by data such as web traffic on property listings and inquiry rates.

Trend 2: Service Sector Expected to Remain as Green Shoot

The service sector in Malaysia is expected to continue its growth trajectory, driven by expansions in technology, finance, and tourism-related industries. As a result, property market trends suggest that cities known for their concentrations of service industries, such as Kuala Lumpur, are expected to witness increasing demand. This demand may also extend to surrounding regions, particularly if the available housing options do not align with the preferences and needs of property seekers.

DataSense Analysis

Using the Change in Demand feature from DataSense, we can identify the highest demand changes for specific units for sale and rental in Kuala Lumpur. This property market trend analysis suggests that these specific projects may be of interest for investors looking to capitalise on the growth of the service sector. Understanding these real estate market trends provides valuable property market insights for making informed investment decisions in Malaysia's property market.

Trend 3: Property Sales in Kulim Expected to See Significant Growth in 2024

Padang Serai in Kulim district witnessed the highest year-on-year demand growth in December 2023. This growth is closely linked to the Kulim Hi-Tech Park, where Japan-based machinery CKD Corporation completed the land and building acquisition for its new plant in June 2023. Current property market trends indicate the presence of this high-tech facility is expected to attract further investments and boost local property demand, making Kulim a prime area for potential property buyers and investors. 

DataSense Analysis

DataSense indicates a spike in demand for residential property in Padang Serai. While there was a significant surge in December 2023, the PropertyGuru Market Index (PGMI) tapered off in Q1 of 2024. However, it is now reaching its peak again, reflecting sustained interest and growing demand in the region.

Trend 4: Johor Continues to Attract the Majority of Foreign Demand

Despite facing the highest overhang supply with approximately 14,780 units, Johor is expected to see improvement in this situation for higher quantum units. The relaxation of MM2H conditions is likely to stimulate increased demand from countries with stronger currencies relative to the Ringgit, despite the 4% stamp duty on buyers. 

Data from DataSense indicates that Johor continues to attract the majority of foreign demand, based on the location of visitors viewing property listings. An interesting exception to this trend is Langkawi, Kedah, a popular tourist destination. These property market insights highlight real estate trends that emphasise Johor's strong appeal to foreign investors.

DataSense Analysis

According to DataSense, foreign demand for properties in Johor is highest in Iskandar Puteri, Puteri Harbour and Senibong.

Using the Demand Analytics feature in DataSense, we can look deeper into the demand for properties in Iskandar Puteri. Findings suggest that buyers in the area are primarily looking for apartments, with sizes ranging from 4,001 to 5,000 sqft. This is in line with the findings in PropertyGuru’s Malaysia Market Outlook 2024 report which highlighted the largest change in median asking price weighted by demand for the smallest units in Johor.

Looking Ahead: Navigating Malaysia’s Property Market

Understanding real estate trends is crucial for making informed decisions in Malaysia's dynamic property market. As we look to the future, it’s essential to recognise how factors like housing affordability, the growth of the service sector, foreign property demand, and the nation’s housing policies will shape the market. 

A real estate data platform like DataSense plays a vital role by providing comprehensive insights into past trends and helping stakeholders identify recurring patterns. Leveraging these insights will be key to navigating the complexities of the market and capitalising on emerging opportunities in Malaysia's property market.