MIDF Amanah expects flattish property loan applications in February, growth in March

• According to data released by Bank Negara Malaysia, total loan applications for purchase of property were off to a weaker start in 2025 as loan applications declined by 12.3% year-on-year (y-o-y) to RM44.8 billion in January after three consecutive increases from October to December last year.

KUALA LUMPUR (March 12): MIDF Amanah Investment Bank Bhd expects loan applications for property purchases to be flattish in February 2025 and grow stronger from March onwards, following lower monthly loan applications in January.

In a research note today, the investment bank said the flattish performance in February was due to the short month.

“Loan application is lower by 5.1% month-on-month in January 2025 likely due to lower loan applications amid school holidays and Chinese New Year public holidays,” it added.

According to data released by Bank Negara Malaysia, total loan applications for purchase of property were off to a weaker start in 2025 as loan applications declined by 12.3% year-on-year (y-o-y) to RM44.8 billion in January after three consecutive increases from October to December last year.

Meanwhile, it said approved loans for property purchases eased 7.8% y-o-y to RM18.8 billion in January 2025 after a 32% y-o-y surge in December 2024.

“Approved loans recorded the first decline in seven months mainly due to lower loan applications,” it said.

On a monthly basis, it said approved loans in January 2025 were lower by 20.7% month-on-month (m-o-m), in line with lower loan applications, while loan approval ratio normalised from 50% in December 2024 to 42% in January this year.

MIDF Amanah noted that property overhang increased to 23,149 units in the fourth quarter of 2024 (4Q2024) from 21,968 units in the third quarter of 2024 (3Q2024) while remaining healthy at below three-year average.

The higher residential overhang in 4Q2024 was mainly due to a rise in residential overhang in Kuala Lumpur, which grew to 4,234 units in 4Q2024 from 3,273 units in 3Q2024.

“Despite the increase in residential overhang in 4Q2024, we opine that property overhang in Malaysia remains healthy as residential overhang remains below three-year average of 27,000 units,” it said.

The investment bank has maintained a “positive” call on the property sector as the sector would likely benefit from the Johor-Singapore Special Economic Zone (JS-SEZ), the Johor Bahru-Singapore Rapid Transit System (RTS), growing demand for data centre and industrial property in Malaysia, which will unlock value of landbank of property developers.

“Besides, overnight policy rate is unchanged at 3%, which should remain supportive to buying interest on property,” it said.

It said the top picks for the sector are Mah Sing Group Bhd and Eco World Development Group Bhd.

The investment bank has maintained a “buy” call on Mah Sing and Eco World with a target price of RM2.09 and RM2.11, respectively.

“We remain positive on Mah Sing as the new sales prospect is positive (as) underpinned by resilient demand for affordable residential projects, while Mah Sing DC Hub @ Southville City will provide recurring income in the near-term.

“We (also) see positive prospects for Eco World’s industrial property development segment while data centre build-and-lease deal for Pearl Computing supports growth of recurring income,” it said.

Planning for a new home? Download a copy of EdgeProp’s guide to new launches — with more than 800 upcoming projects inside!