MBSB Investment Bank has maintained its Neutral stance on the local property sector, warning that growing oversupply, softer loan demand and a more challenging external environment could weigh on developers’ sales and earnings.
Property loan applications fell 4.0% year-on-year to RM58.4bil in August 2026, marking their first decline in five months.
Applications also slipped 7.2% month-on-month, although cumulative applications for the first eight months of 2026 remained marginally higher at RM440.8bil.
MBSB said consumers remained cautious amid higher costs and persistent inflationary pressures.
Approved property loans also weakened, dropping 13.1% year-on-year and 12.4% month-on-month to RM23.8bil in August. The approval ratio fell to 40.8%, from 45.0% a year earlier, indicating greater caution among banks.
Meanwhile, Malaysia’s residential property overhang continued to worsen.
Unsold completed residential units rose for the seventh consecutive quarter to 33,094 units in quarter two of 2026, from 32,801 units in the previous quarter and 26,911 units a year earlier.
Johor, Selangor and Perak recorded the highest overhang levels. Serviced apartment overhang also surged to 23,375 units, driven mainly by Kuala Lumpur and Selangor.
MBSB believes ongoing geopolitical tensions, elevated oil prices and rising bond yields could further pressure sentiment and affordability.
Higher property overhang could also limit developers’ pricing power and slow sales momentum, prompting the research house to apply wider RNAV discounts across its coverage.
Despite the cautious outlook, MBSB retained BUY calls on Matrix Concepts and Mah Sing Group, with revised target prices of RM1.33 and RM1.15 respectively.
Matrix is supported by its MVV City development and attractive 6.7% dividend yield, while Mah Sing benefits from M Series sales, industrial property expansion and land monetisation. — Focus Malaysia
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