KUALA LUMPUR: MIDF Research sees a tepid new sales outlook for property demand on weak consumer sentiment due to rising overnight policy rate (OPR).
The firm noted that loan applications for purchase of property fell 7.3 per cent month-on-month (mom) to RM43.95 billion in October.
The two consecutive declines in loan application could be due to OPR hike by Bank Negara Malaysia in September which negatively impacted buying interest and affordability of buyers.
On a yearly basis, loan applications eased by 10 per cent year-on-year (yoy) in October after the positive growth in the past three months, signaling demand for property is taking a breather.
"Looking ahead, we see that loan applications remain subdued as Bank Negara hiked OPR by 25 basis points (bps) in November and may hike OPR further in 2023," it said.
Nevertheless, MIDF Research said the easing of property overhang was slightly positive to the sector as further decline in property overhang going forward may ease concerns of oversupply in the residential market.
The firm noted that the decline in overhang units could be attributed to reopening of the economy.
"Besides, foreign buyers such as from Singapore returned to our local property market following the reopening of the international border in April 2022.
"In a nutshell, we see the lower property overhang units to be slightly positive to the property sector as overhang units fell below 30,000 units which is the lowest level since the second quarter (Q2) 2021," it said.
MIDF Research maintained its "Neutral" stance on the property sector.
"On top picks for the sector, we favour companies with high exposure to affordable price range properties as projects in the mid-market and affordable segments continue to see resilient demand from home buyers.
"In this context, we like Mah Sing Group Bhd and Glomac Bhd due to their strategy of selling properties in affordable price ranges," it added.