MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained a positive rating on the Malaysian property sector, citing a rebound in loan applications and approved loans for property purchases in October 2024. The research house has reaffirmed their BUY calls on Mah Sing Group (RM2.04) and Matrix Concepts (RM2.48), noting strong new sales momentum and strategic growth initiatives.
Loan applications for property purchases surged to RM56.4 billion in October 2024, a 15% month-on-month increase, following a decline in September attributed to public and school holidays. Year-on-year, the October applications also grew by 4.1%, signalling sustained buyer interest.
This brought the cumulative loan applications for the first ten months of 2024 to RM532.4 billion, reflecting a 3.96% increase year-on-year. Approved loans similarly rebounded to RM24.3 billion in October, up 11.3% from the prior month, with a stable loan approval ratio of 44% for the year-to-date. The house believes this trend bodes well for property developers' new sales prospects.
The sector's third-quarter earnings were mixed, with most property developers meeting expectations. Sunway Bhd outperformed due to a significant earnings boost from its Singapore development project, Parc Central Residences. Meanwhile, SP Setia fell short of expectations due to slower progress billing and higher taxes.
MIDF Research noted that despite rising expenses impacting some developers like Matrix Concepts and SP Setia, stable new sales and ongoing projects supported overall earnings growth in the quarter.
In terms of property overhang, Malaysia's residential property overhang fell to 21,968 units in the third quarter of 2024, the lowest level in seven years. This improvement was led by inventory clearances in key states such as Kuala Lumpur, Perak, Johor, Penang, and Selangor. The decline in serviced apartment overhang, particularly in Johor and Kuala Lumpur, further reflected developers' efforts to manage supply and cater to stronger demand.
Looking ahead, MIDF Research anticipates continued earnings growth for property developers in 2025, supported by steady sales and progress billing from ongoing projects. The Johor-Singapore Special Economic Zone (JS-SEZ) and the Johor Bahru-Singapore Rapid Transit System (RTS) Link remain key catalysts for the sector.
