Malaysia’s housing market remained sluggish within the first half of 2025, weighed down by unsold reasonably priced houses and weakening developer confidence, in response to the Actual Property and Housing Builders’ Affiliation (Rehda).
On the launch of its Property Trade Survey for 1H2025 and Market Outlook for 2H2025 and 1H2026, Rehda highlighted a persistent mismatch between housing provide and purchaser affordability. Datuk NK Tong, Rehda’s fast previous president, mentioned unsuitable places and price-income gaps had been the first causes behind unsold models.
“Underneath present guidelines, builders should allocate as much as 50% of models for reasonably priced housing no matter location. Whereas the coverage is well-intentioned, this blanket strategy typically disconnects provide from demand,” Tong defined. Knowledge from the Nationwide Property Info Centre (Napic) confirmed that reasonably priced houses made up 20.7% of Malaysia’s unsold models in Q1 2025—the biggest class of residential overhang.
Developer sentiment weakens
The survey revealed a pointy fall in market confidence. Solely 19% of 187 senior executives expressed optimism about mid-2025 prospects, in contrast with 51% six months earlier. Confidence in gross sales additionally slumped to 19%.
Rehda president Datuk Ho Hon Sang cited rising building prices, labour shortages, financing hurdles and uncertainty over the upcoming gross sales and repair tax (SST) as main issues. Reflecting the cautious temper, simply 41% of builders plan to launch new initiatives within the second half of the 12 months, down from 56% beforehand.
Financing challenges and mortgage rejections
The report additionally famous a 26% decline in new residential launches, with gross sales charges for brand new models falling sharply to 24% from 55% in late 2024. Whereas landed 2- and 3-storey terraces continued to carry out comparatively higher, total demand remained muted.
Financing remained a key impediment, with 71% of builders citing difficulties in securing end-financing for consumers. Mortgage rejection charges had been highest for houses priced between RM300,001 and RM500,000, a phase focused as reasonably priced housing. Greater than half of builders held unsold accomplished models, largely serviced residences priced above RM1 million or inside the RM500,001–RM600,000 bracket.
Rising prices and tax worries
Though residential building is exempt from the SST, builders flagged issues in separating taxable labour prices from non-taxable supplies in combined contracts. Rehda has proposed a simplified flat-rate strategy and is participating authorities to resolve the difficulty. In the meantime, 74% of respondents reported increased enterprise prices, squeezing revenue margins additional.
Outlook forward
For the second half of 2025, builders are planning 24,427 new models—7,608 landed and 16,819 strata—however anticipate modest take-up charges of 25%–50% after six months.
The general outlook for the following 12 months is described as impartial, with a slight uptick in optimism for early 2026. Tong cautioned, nonetheless, that sentiment might shift as soon as the complete affect of the SST turns into clearer.
Rehda reiterated its name for the revival of the Residence Possession Marketing campaign to stimulate demand and reaffirmed its members’ dedication to delivering high quality, reasonably priced housing regardless of ongoing challenges.
