Property Sector Faces Softer Loan Demand, Rising Overhang

According to MBSB Research, property loan applications in Malaysia softened in 1QCY26, totaling RM143.9 billion (-2%yoy). March saw a rebound to RM54.2 billion (+48%mom) after February’s festive-driven decline, though applications eased slightly (-0.5%yoy) amid US–Iran geopolitical tensions. Loan approvals rose to RM22 billion (+40.7%mom) in March but slipped (-5.4%yoy), with approval ratios lower at 40.6% versus 42.7% a year earlier. Cumulatively, approvals were broadly unchanged at RM59.9 billion (+0.1%yoy).

Softer Loan

Meanwhile, unsold completed residential units climbed to 32,801 in 1QCY26, the highest in three years, with Perak (4,063 units) leading, followed by Johor, Selangor, KL, and Penang. Serviced apartment overhang also rose to 19,263 units. Rising overhang poses downside risks, potentially slowing new launches.

MBSB maintains a NEUTRAL stance on the sector, citing inflationary pressures and margin compression from higher oil prices. Top picks include Mah Sing Group (TP: RM1.25), Matrix Concepts (TP: RM1.55), and IOI Properties (TP: RM4.64).

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