“Malaysia’s property market in 2025 shows cautious optimism with rising launches and affordable housing demand, but challenges persist due to rising costs and unsold stock, experts warn.”
Kuala Lumpur, 30th June 2025, 10.20am – Malaysia’s property market is poised for gradual growth in 2025, but experts warn that challenges such as rising construction costs, supply-demand mismatches, and buyer selectivity could temper overall performance.
Olive Property Consultants CEO Samuel Tan said he remains “cautiously optimistic” about the market outlook, noting that macroeconomic stability and government incentives are supportive—but external and structural headwinds remain.
“Market momentum may be curbed by factors such as increasing construction costs, higher tariffs under revised U.S. trade policy, and persistent oversupply in certain urban high-rise segments,” Tan told StarBiz.
Overhang Persists, Especially in Affordable Segments
Zerin Properties CEO Previn Singhe pointed to Malaysia’s ongoing property overhang, revealing that as of Q1 2025, 23,515 completed residential units worth RM15 billion remain unsold—a marginal increase from end-2024.
While the volume of overhang improved by 10.3% last year, 59% of these unsold units are priced at RM500,000 and below, indicating that affordability isn’t the sole barrier.
“Location, poor product design, and build quality continue to drive the gap between supply and demand,” Previn noted.
Rising Costs and Margin Pressures
Previn also cautioned that escalating construction and material costs are compressing developer margins—particularly for smaller or highly-leveraged players.
“Buyers are becoming more discerning. They’re not just looking at price but demanding better locations, greater livability, and transparency.”
Q1 2025 Transaction Data Reflects Cooling Sentiment
According to the National Property Information Centre (NAPIC):
- Property transaction value fell 8.9% y-o-y to RM51.42 billion.
- Transaction volume dropped 6.2% to 97,772 units.
- New residential launches surged to 12,498 units (Q1 2025), a 124% increase from 5,585 a year earlier.
- Take-up rate for new launches was only 10.8% (1,351 units).
“The sharp rise in launches isn’t over-exuberance,” Previn explained. “It’s a tactical move to regain momentum lost during late-2024, driven by improved macro conditions and early-year sales targets—especially in growth corridors like Selangor, Johor, and Negeri Sembilan.”
Focus Shifts to Affordable and Landed Properties
Data shows that developers are targeting mass market demand:
- 72.8% of new launches are in the landed segment.
- 42.8% are priced between RM300,001 and RM500,000, aimed at the M40 income group.
Malaysia’s House Price Index also remained stable, growing 0.9% y-o-y in Q1 2025, with average urban prices still below RM500,000.
“This price stability is crucial to maintaining buyer interest, particularly in the mid-market segment,” Previn added.
Government Incentives and Policy Support
Stable overnight policy rates, stamp duty exemptions for first-time buyers, and ongoing public infrastructure projects are providing market support.
However, the mismatch between rising supply and subdued absorption rates underscores the need for better alignment with actual demand.
“Developers must respond not just with the right price, but also with thoughtful design, location strategy, and delivery timing,” said Previn.
Rising Investor Confidence in Key Growth Corridors
Savills Malaysia Group Managing Director Datuk Paul Khong noted a rebound in buyer confidence supported by macroeconomic stability, stronger upgrader demand, and increasing investor interest in Greater KL, Iskandar Malaysia, and Penang.
“We’re seeing developers activate landbanks acquired from 2020–2023. New launches are picking up in Greater KL, Penang, and southern corridors.”
Infrastructure Projects and Affordable Housing Initiatives Drive Sentiment
Olive Tree Property Consultants ED Tan Wee Tiam highlighted the role of government programmes such as Residensi Rakyat and Projek Rumah Mesra Rakyat, as well as catalytic projects like the Johor-Singapore SEZ and Forest City Special Financial Zone, in bolstering market sentiment.
“There’s growing demand for homes under RM500,000—especially from first-time buyers and the M40 segment.”
However, he warned that excessive launches without corresponding take-up could worsen the overhang.
“Authorities and developers must leverage big data to maintain a healthy supply-demand balance.”
