OPR hike will keep property market sluggish, says think tank

 

There has been a 5.7% drop in property sales in the first quarter of 2023 and the increase in the overnight policy rate has been cited as one of the reasons for the decline. (Facebook pic)

PETALING JAYA: The increase in the overnight policy rate (OPR) last month is likely to keep the property market sluggish, a think tank said.

Consilz Tan, a fellow at the Center for Market Education, said the increase to 3% will have a ripple effect on the economy, including increased costs for developers.

“The hike in cost will most likely be passed on to home buyers which may result in higher house prices and there will be fewer discounts or promotions,” Tan told FMT.

The borrowing costs will also increase, affecting demand for housing loans as prospective buyers may delay purchases of new homes, she said.

She was commenting on a report that there has been a 5.7% drop in property sales in the first quarter of 2023 compared with the last quarter of 2022.

Only 89,000 units of property were bought and sold in this period, while only 4,700 new units were launched, fewer than in the previous quarter.

The Valuation and Property Services Department said property purchases typically dipped in the early part of the year but the increase in the OPR was also a factor.

Tan, who sits on the board of the Malaysian Financial Planning Council, said she believes the rental market will become more appealing to consumers following the OPR hike, though landlords servicing housing loans may be tempted to raise rentals.

Chartered surveyor Ernest Cheong said the OPR hike would put a strain on house buyers who will need to fork out more money for their housing loans.

However, he said, the government should not intervene in the property market or offer incentives to prop it up.

“It is best for the government to do nothing, let the market forces take care of itself,” he said.

Socio-Economic Research Centre executive director Lee Heng Guie believes the OPR hike will provide “stability” in the property market as it is unlikely to be raised again this year.

However, he said any increase in the OPR will not lead to a complete halt in property sales as those who were intent on buying a house would still do so. - FMT