Property loan applications rise to RM53bil, indicating stronger demand

Approved loans for property purchases returned to a 15.2% year-on-year growth in April 2024, says MIDF Research.

The April 2024 uptick in total loan applications for property purchases which rose to RM52.9 billion as reported by Bank Negara Malaysia (BNM) signals a stronger demand for properties, said MIDF Research.

In a research note, MIDF said the higher loan application is in line with its expectation of stronger demand in 2024, on the back of an improving outlook for the property sector and the status quo of overnight policy rate (OPR) at 3%.

Additionally, the research firm said approved loans for property purchases returned to a 15.2% year-on-year growth (YoY) in April 2024, driven mainly by the higher loan applications.

“We opine that the loan approval should remain encouraging going forward on the back of higher loan applications.

That should translate into better new sales prospects for developers, it said.

Overall, earnings growth in the first quarter of 2024 (Q1 2024) for property companies was positive, driven by higher recognition from property projects as the labour shortage issue was resolved while improving new property sales also supported earnings growth.

Property companies’ new sales in Q1 2024 were largely on track to meet expectations as buying interest remains healthy, it said.

Meanwhile, a few property companies such as Mah Sing Group, UEM Sunrise, and Sime Darby Property, ventured into the data centre industry recently to ride on the growing demand for data centres in Malaysia.

“We view such ventures by property companies positively as the move enhances the value of their landbank.

It also increases their recurring income (stream) in the form of rental or profit sharing of data centre businesses,it said.

MIDF said that income derived from data centres should remain stable due to its growing demand in Malaysia.

According to data released by the National Property Information Centre (NAPIC), residential overhang declined to 24,208 units in Q1 2024 from 25,816 units in the fourth quarter of 2023 (Q4 2023), with Perak having the highest unsold completed housing at 4,588 units in Q1 2024 versus 4,598 units in Q4 2023.

Overall, the residential overhang continued to decline in Q1 2024 and fell to the lowest level since 2018,it said, adding that this is a positive indication for the property sector.

Therefore, MIDF has maintained a positive call on the property sector with a buy call for Mah Sing Group and Matrix Concepts with target prices of RM1.83 and RM2.00, respectively.

(Source : Freemalaysia Today )