MIDF Research maintains positive outlook on property sector, buoyed by improving landscape

MIDF Research has maintained a positive outlook on the property sector as it sees that the landscape for the sector is improving.

This is underpinned by a stable House Price Index (HPI) outlook, an unchanged overnight policy rate (OPR) at 3.0%, and a noticeable reduction in residential overhang, it said in a sector update on Thursday (April 18).

Additionally, the upcoming infrastructure projects such as the Johor Bahru-Singapore Rapid Transit System (RTS) Link and Penang Light Rail Transit (LRT) will further improve connectivity and support buying sentiments on property in Malaysia, the research firm said.

According to the National Property Information Centre (NAPIC), Malaysia’s HPI has been on an upward trajectory since 2022, following the reopening of the economy.

The HPI has been on a growth trajectory since the fourth quarter of 2021 (4Q 2021), experiencing a robust recovery throughout 2022, driven by improvements in the Malaysian property market.

In 3Q 2023, the HPI stood at 219.4, marking a notable increase from 216.8 recorded in 2Q 2023 and 218.0 in 3Q 2022.

Meanwhile, the research firm reckoned that the rising construction cost and inflationary pressure may drive property prices marginally higher as developers pass on higher costs to homebuyers.

At the same time, it noted that loan applications declined on a yearly basis for the first time in eight months as demand for property took a breather.

According to data from Bank Negara Malaysia, the total loan application for the purchase of property was lower in Feb 2024 at RM40.1 bil (-21% month-on-month) due to the short month.

On a yearly basis, loan applications in Feb 2024 were lower by 19% year-on-year (y-o-y) after a strong growth of 46% y-o-y in January 2024.

“Nevertheless, total loan applications in the first two months of 2024 was higher by 8.0% y-o-y to RM91 bil, which indicates stronger demand for property,” it added.

“We see that buying interest on property to grow stronger in 2024 as outlook for property sector is positive.”

MIDF Research’s top picks for the sector are Mah Sing Group (‘buy’; target price [TP]: RM1.42) and Matrix Concepts (‘buy’; TP: RM1.91).

“We like Mah Sing due to its exposure to affordable residential segment and growing presence in industrial properties segment,” it remarked.

“Besides, its growing property presence in Johor will further support growth of its property sales.

“Meanwhile, we like Matrix Concepts due to its stable outlook which is driven by its Sendayan township in Seremban that focused on affordable landed home.

“Its landbank expansion in Labu will further support growth of its property development business. In addition, dividend yield of Matrix Concepts is attractive at 5.4%.” – April 18, 2024


Main pic credit: Properly

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