KUALA LUMPUR: Henry Butcher Malaysia expects the residential property market in Kuala Lumpur and Selangor to be stable in 2025.

The firm said the market will continue to record positive increases in the volume and value of transactions, although it believes that due to the still cautious consumer sentiments, the increases will just be in the single digits.

"As the country's leading residential markets, we believe the continued stability and growth in these regions will contribute to a further reduction in the residential overhang. House prices may rise as well, though at a more moderate pace," the firm said in its latest property market 2025 report.

Factors to Watch in 2025

The residential property market focus in 2025 will continue to be on:

• Landed homes in Selangor and high-rise apartments/condominiums in Kuala Lumpur in view of the high land costs within and closer to the city, which makes the development of landed properties not feasible.

• Homes priced between RM500,000 and RM1 million in popular locations in Kuala Lumpur and affordable homes costing around RM500,000 and below in Selangor.

• Smaller-sized units of around 1,000 sq ft and below in higher-density projects.

• Niche high-end projects, which can be strata or landed properties in good locations, as there is unsatisfied pent-up demand due to the scarcity of such projects being launched in recent years.

• Projects with innovative concepts, designs, and themes that set them apart from traditional projects in the market.

• The relatively more stable political situation as well as strong economic growth will provide a conducive environment for people to consider buying their home or investing in the residential property market.

• Except for the tax relief on housing loan interest granted to encourage first-time home buyers to buy their first home, there were no substantial measures announced in Budget 2025 that will stimulate the property market.

• House prices may be raised by developers in 2025 to cover the higher cost of building materials.

• The increase in the cost of living may deter purchasers, especially those in the B40 and M40 groups, from spending on big-ticket items like property.

• External events such as the continuing wars in Gaza and Ukraine are factors that could affect investors' sentiments.

• The uncertainty over the trade policies that will be adopted by the incoming Trump administration could cause investors to hold back until things are clearer and the impact of the new US trade policies can be seen.

Bright Spots for 2025

• The better market performance and improved market sentiments have led to developers building up their land banks and so we should see more new project launches by these developers in the coming years. This is especially when developers have generally reported better financial results and have become more confident of good reception to their new launches by the market.

• Bank Negara Malaysia has not raised the Overnight Policy Rates (OPR) since the last increase in May 2023 and economists are expecting the current rate to be maintained for the year. This augurs well for the economy in general and will benefit the property market, as any rise in interest rates will make property purchases more expensive.

• The continued positive growth enjoyed by the Malaysian economy as projected for 2025 will provide the right environment for the property market, as investors and house buyers will be more confident and motivated to invest in the market.

• The increase in the minimum wage effective 1 February 2025, as well as the rise in wages of civil servants, could put more disposable income in the pockets of Malaysians and this may lead to some deciding to purchase their own homes. - Story courtesy of Henry Butcher Malaysia

Klang Valley - Residential Review 2024

The residential property market for both Kuala Lumpur and Selangor continued to register a positive performance in 2024, as indicated by the increases registered in the volume and value of transactions in the first nine months of the year.

Kuala Lumpur recorded an increase of just under 4 per cent in the volume of transactions, while the value of transactions went up by 6 per cent. Selangor, meanwhile, recorded a rise of nearly 5 per cent in the volume of transactions but a jump of more than 7 per cent in the value of transactions.

This is an improvement from the performance for the same period in 2023, where Kuala Lumpur saw only a marginal rise in volume but a decline in value of transactions, while Selangor recorded declines in both volume and value of transactions.

About 31 per cent of the residential transactions recorded in Kuala Lumpur in the first nine months of 2024 are those priced at RM300,000 and below, while 46 per cent are priced at RM500,000 and above. Houses priced at RM1 million and above alone contribute 21 per cent of the total.

For Selangor, 35 per cent of the residential units transacted were those priced under RM300,000, while 26 per cent of the transactions relate to units priced between RM500,000 and RM1 million. Only 10 per cent of the transactions are of houses priced at RM1 million and above.

In terms of new launches, Kuala Lumpur recorded a total of 5,281 new units launched in the first nine months of 2024, which is an increase of 51 per cent over the same period in 2023.

Selangor, on the other hand, recorded 7,794 new units launched, up 8 per cent from the previous year.

Sales performance, meanwhile, improved to 37 per cent for Kuala Lumpur compared to only 24 per cent in 2023, while Selangor registered a drop in the sales take-up rate from 58 per cent to 35 per cent.

There were 21,968 residential overhang units in the country as of Q3 2024, down from 25,311 as of Q3 2023. The improvement was also noted in Selangor, where the residential overhang declined from 3,296 to 2,304 units.

However, Kuala Lumpur registered a 5 per cent rise in the residential overhang from 3,111 to 3,273 units.

The House Price Index released by NAPIC for Q3 2023 showed that the index for Kuala Lumpur was more or less maintained at the same level as the previous year, with all house types except for detached houses going up.

The index for semi-detached and high-rise properties registered the highest appreciation. Selangor recorded a slight decline in the index, with both terraced and high-rises recording a drop. The price index for detached houses remained unchanged, whilst there was a slight increase for semi-detached houses.