2027 interest rate risks, falling loan approvals cloud housing outlook: JLL Malaysia
KUALA LUMPUR: Malaysia's residential property market could face mounting pressure in 2027 as declining housing loan approval rates, tighter lending practices and the prospect of higher borrowing costs weigh on homebuyer demand.
Malaysia's residential property market may face increasing pressure in 2027 due to declining housing loan approval rates, stricter lending practices, and the possibility of higher borrowing costs, according to JLL Malaysia. Managing director Jamie Tan stated that the potential increase in Bank Negara Malaysia's overnight policy rate next year could impact residential property demand, as most homebuyers rely on mortgages to finance their purchases.
The weakening mortgage accessibility has seen housing loan approval rates drop to 38.36 percent in September 2026, down from the historical range of 40-41 percent between 2022 and 2025. This trend is partly attributed to borrowers' creditworthiness, particularly among self-employed individuals and those working in the gig economy, who often find it difficult to secure conventional financing due to the lack of fixed salaries or formal payslips.
Government-backed financing initiatives, like Skim Jaminan Kredit Perumahan, may help address this issue. However, smaller and medium-sized developers have paused or delayed launches while assessing market conditions heading into 2027, with JLL Malaysia executive director Jeannie Tan raising concerns over oversupply, particularly for high-end service apartments in urban areas like Kuala Lumpur.
Banks are cautious about financing such properties due to concerns about their viability, which could lead to a negative perception and affect financing accessibility.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
