Higher Wages, Minimum Wage Hike Drive Property Demand, Affordability This Year - Hong Leong Investment Bank

KUALA LUMPUR, Jan 15 (Bernama) -- Higher wages for civil servants and the introduction of a higher minimum wage remained key factors in catalysing demand and raising affordability for properties across the country this year, said Hong Leong Investment Bank Bhd. 

Its group managing director and chief executive officer Lee Jim Leng said the current three per cent overnight policy rate (OPR) and stable mortgage rates in Malaysia bode well for demand in the property sector.

“These low interest rates make ownership more affordable for those looking to invest in the near future,” she said in her opening remarks at the Bursa Malaysia-Hong Leong Investment Bank 18th Stratum Focus Series here today.

She said the sector’s optimistic outlook is further supported by the government’s initiatives in Budget 2025, where Prime Minister Datuk Seri Anwar Ibrahim announced tax reliefs of up to RM7,000 for first-time homebuyers purchasing properties priced up to RM500,000 and up to RM5,000 for homes priced between RM500,000 and RM750,000.

“With a stable employment growth rate and an expected gross domestic product (GDP) growth of 4.9 per cent for Malaysia this year, according to HLIB’s projection, the economy remains on firm ground, providing the right conditions for sustained growth in the property sector,” she added.

Lee believes that challenges, particularly affordability concerns, inflationary pressures and global uncertainties, still persist amidst the optimism. 

“Tackling these challenges will require collaborative efforts and innovative strategies,” she said. 

According to the National Property Information Centre (NAPIC), Malaysia's property transaction values soared to a five-year high of RM105.65 billion in the first half of 2024, marking an impressive 23.8 per cent year-on-year growth.

Moreover, the Kuala Lumpur Property Index is seen to rise by 31.17 per cent in 2024, and the residential overhang situation has also improved, with a 12.3 per cent reduction in volume of unsold properties.

Meanwhile, Knight Frank Malaysia Sdn Bhd executive director Amy Wong expects the property sector’s focus this year to be primarily on the industrial sector as government policies continue to drive foreign direct investments into the country.

“Foreign investments mean manufacturing plants, driving these multinational corporations to set up their plants here in Malaysia. 

“The Klang Valley, which is the central area, has ports and airports, while Johor also boasts a strong port in relation to its proximity to Singapore. Additionally, Penang and Kedah up north are known for their electrical and electronics hubs,” she said. 

— BERNAMA