Balancing growth and sustainability in Malaysia’s property market

Malaysia’s property market is stirring back to life, fuelled by foreign buyers and major infrastructure drives—but questions over oversupply still loom

In the 16 years Sean Tan has been working in real estate, there have been few jobs he hasn’t held. He’s been an architect, investor, advisor, and YouTuber—and for a while, he even laid concrete in new homes.

Over that time, he’s witnessed plenty of highs and lows. But never, he says, has Malaysia’s residential market looked this good.

“This is the first time I feel optimism about the market,” he says. “It’s one of those rare moments when I think, ‘Hmm, property is coming up.’”

After years of lacklustre performance, Malaysia’s residential market hit a 10-year high at the end of 2023, with more than 420,000 transactions amounting to MYR232.3 billion (USD56 billion).

It marked a turning point after a decade of low buyer confidence and stagnating prices, following the abolition of a popular government housing scheme in 2014.

The Developer Interest Bearing Scheme or DIBS allowed developers to absorb interest costs on mortgages during the construction period. That meant buyers didn’t have to make any monthly repayments until the property was completed. The scheme encouraged rampant speculation, with buyers snapping up properties intending to flip them on completion. Prices surged and homes became increasingly unaffordable.

This is the first time I feel optimism about the market. It’s one of those rare moments when I think, ‘Hmm, property is coming up’

When the government abolished DIBS, demand shrank, and transactions fell sharply. But many projects were already in the pipeline, so construction continued and units went unsold—leading to a housing glut and falling or stagnant prices.

That was the start of a long correction. Delayed further by Covid lockdowns, the market is now showing signs of sustainable recovery—helped by new government schemes and a pivot by developers toward undersupplied, lower-end properties.

One of the most impactful of these schemes has been MyHome, which offers up to MYR30,000 per unit to incentivise developers to build affordable homes. There was also a stamp duty exemption for first-time buyers of units priced up to MYR500,000, valid until the end of 2024.

“This remarkable growth is driven by low interest rates, political stability, clear government policy, and increased investor confidence—both domestic and international,” commented Housing and Local Government Minister Nga Kor Ming recently.

“Demand for affordable housing remains strong, and we have already achieved 93.9% of our target to build and approve 500,000 affordable homes under the 12th Malaysian Plan. We are confident in meeting this goal by the end of the year.”

Among the developers capitalising on this shift is Mah Sing Group, whose M-Series homes are targeted at middleincome and first-time buyers. In 2024, the company recorded a net profit of MYR240.75 million—an almost 12 percent increase from MYR215.29 million the previous year.

“Affordable housing will continue to be a key driver, with Mah Sing’s M-Series catering to first-time buyers and middle-income groups, while the upgraded M-Series will appeal to upgraders, foreign buyers, and investors, with premium units starting at MYR700,000,” says a company spokesperson.

“Additionally, Budget 2025 tax incentives, major infrastructure projects—including the Johor-Singapore Rapid Transit System link, Penang LRT, and Klang Valley MRT3—and the Johor-Singapore Special Economic Zone initiative are expected to further boost localised demand and reinforce the positive outlook for the sector.”

While landed homes have led recent growth, high-rises are also making a comeback—particularly in urban centres such as Kuala Lumpur, Johor Bahru, and Penang.

Tan Hui Yin, a real estate lawyer at Tan Chap & Associates, explained that while there was an oversupply of high-rises post-pandemic, today, the narrative has changed, with affordability, urban migration, and new rail links driving renewed interest.

“Although landed homes continue to attract buyers, especially in suburban and township developments, high-rise properties have shown stronger transactional momentum—both in volume and value—compared to the same period last year,” she says.

She expects this trend to continue for the rest of 2025, with high-rises priced between MYR400,000 and MYR700,000 likely to perform particularly well.

Still, Hui Yin acknowledges challenges remain.

“With prices rising, first-time buyers and those on tighter budgets might struggle to enter the market,” she adds. “Even for smaller high-rise units, price increases may begin to outpace income growth, making these properties less accessible to the B40 and M40 groups, which comprise a large portion of the buyer base.”

“If you’re a first-time homebuyer, prices aren’t going to be this good again,” agrees Sean Tan. “Construction costs have increased by 28-30 percent year-on-year in prime locations. And cheap land? There’s no more of that.”

External forces are adding pressure, too. Donald Trump’s global tariffs—paused for most countries until July—have already pushed up prices for construction materials.

“Malaysia’s construction and architecture sector, from residential housing to large infrastructure projects, is feeling the ripple effects,” said Sarly Adre Sarkum, head of the Malaysia Green Building Confederation, in April.

“For Malaysia, higher metal prices translate into more expensive beams, rebar, cladding, and fixtures.

Whether Malaysia can sustain this upturn depends on how well it balances the market—and how fast.

Though typically slow, the first quarter of 2025 was “a little sluggish,” said Siva Shanker, CEO of real estate agency Rahim & Co International.

Speaking to BFM 89.9, he said it was likely “a kneejerk reaction to Donald Trump’s policies” and predicted it “won’t be the sentiment for the rest of the year.”

Prime Minister Anwar Ibrahim is also keen to maintain momentum.

Speaking at a ground-breaking event for an affordable housing project in Kuala Lumpur, he said: “I do not agree with having a ceremonial groundbreaking event just to be followed by three months of inaction.”

The message to the industry was clear: We’ve come this far—let’s not get complacent.

The original version of this article appeared in PropertyGuru Property Report Magazine Issue No. 190 on issuu and Magzter. Write to our editors at [email protected].