“Malaysia’s housing market slows in 2025 as unsold affordable homes rise, with Rehda citing price mismatch, loan rejections, and SST concerns.”
Kuala Lumpur, 24th September 2025, 10.53am – Malaysia’s housing market remained subdued in the first half of 2025, with unsold affordable homes continuing to pose a challenge, according to the Real Estate and Housing Developers’ Association (Rehda).
At a media briefing on the Rehda Property Industry Survey for 1H2025 and the Market Outlook for 2H2025 and 1H2026, Rehda immediate past president Datuk NK Tong highlighted that unsuitable locations and mismatches between property prices and household income are key reasons for the high number of unsold units.
“Current policies require developers to allocate up to 50% of units for affordable housing regardless of location. While the intent is good, blanket requirements often result in supply-demand mismatches. If the location is unattractive or if buyers in the area cannot afford the selling price, units are likely to remain unsold,” he said.
Data from the National Property Information Centre (Napic) revealed that affordable homes made up 20.7% of Malaysia’s unsold units in Q1 2025—the largest category within the residential overhang.
Weak developer confidence
Developer sentiment has deteriorated sharply, with only 19% of 187 surveyed executives optimistic about the market in mid-2025, compared to 51% six months earlier. Confidence in sales also dropped to 19% from 52%.
Rehda president Datuk Ho Hon Sang cited rising construction costs, labour shortages, financing challenges, and the upcoming sales and service tax (SST) as the biggest concerns.
Reflecting this caution, only 41% of developers plan to launch new projects in 2H2025, down from 56% earlier. Meanwhile, 62% have no plans to acquire new land, reversing the 70% that previously intended to expand.
Financing hurdles for affordable buyers
The survey reported a 26% drop in new residential launches compared with the previous period, while sales of new units fell to 24% from 55% in late 2024.
Although landed 2- and 3-storey terraces remain the most popular segment, financing remains a major hurdle. About 71% of developers reported difficulties with end-financing for buyers, with rejection rates highest for homes priced between RM300,001 and RM500,000—a range often targeted at middle-income (M40) households.
More than half of respondents also held unsold completed units, primarily serviced residences priced above RM1 million or in the RM500,001–RM600,000 range.
Rising costs and SST impact
Uncertainty over SST implementation on construction services for commercial projects has added pressure. Although residential construction is exempt, separating taxable labour costs from non-taxable materials in mixed contracts has proven difficult.
Rehda has proposed a flat-rate calculation method to simplify compliance and is in ongoing discussions with the authorities.
Developers further reported narrowing margins and higher operating expenses, with 74% citing increased business costs.
Outlook cautious but neutral
For 2H2025, developers plan to launch 7,608 landed units and 16,819 strata units, though most expect slow take-up rates of just 25%–50% within six months.
The overall outlook for the next 12 months is neutral, with some improvement expected in 1H2026. However, Tong noted that the impact of SST could alter sentiment.
“This optimism may change once the effects of SST become clearer. Regardless, developers will remain cautious,” he said.
Rehda also reiterated its call for the revival of the Home Ownership Campaign (HOC) to stimulate demand and reaffirmed its members’ commitment to delivering quality and affordable housing despite economic and tax-related challenges.
