OPR hike may affect house buying sentiments amidst downward trend in sales, say experts

SHAH ALAM - Experts say the increase in the Overnight Policy Rate (OPR) may have an impact on the sentiments of potential homebuyers, particularly considering the ongoing downward trend in sales.

However, Property Guru Country Manager Sheldon Fernandez said it is still too early to fully assess the extent of its impact.

He said the recent PropertyGuru Malaysia Property Market Report (MPMR) Q2 2023 findings revealed a downward trend in sales and rental demand in Q1 2023 as prospective homebuyers delay their plans for big purchases due to higher borrowing costs and rising living expenses.

"Similarly, the recent MPMR Q2 2023 reflected a decrease in Rental Demand Index by 6.3 per cent due to a substantial increase in rental prices, where the Rental Price Index went up by 4.7 percent," he told Sinar Daily.

Commenting further, Fernandez said most Malaysian respondents own landed properties in Johor and Selangor.

"While we have yet to see any clear trend on how the OPR hikes will impact homeownership preferences, our Consumer Sentiment Study 2023 found that most Malaysian respondents currently own landed properties, with some of the most viewed landed-residential projects in Q1 2023 located in Johor and Selangor.

"With this in mind, we will continue monitoring property type preferences among potential homeowners," he said.

Besides housing type, Sheldon said the study also revealed that 98 per cent of Malaysians continue to express concerns on climate change, a sentiment that has become even more pronounced following the unfortunate Batang Kali landslide tragedy in December last year.

"Additionally, Malaysians have become increasingly mindful of various factors, such as natural disasters, which have become more prevalent in recent times," he added.

Furthermore, Fernandez added that nearly half of Malaysians have a budget of less than RM350,000 to buy properties.

He said the disparity between income levels and house prices in Malaysia is widening, with nearly 3 in 4 respondents expressed the need for increased government support to tackle the rising inflation.

Moreover, the finding revealed that 51 percent of consumers stated their inability to buy a house without government assistance.

As the government is making efforts to tackle these challenges, it is pivotal for property developers to ensure that their offerings align with the evolving demands of homebuyers, he said.

"Our outlook is cautiously optimistic as the economy stablises and we continue to look for more positive signs of growth in the property market," he added.

Meanwhile, Malaysian Institute of Estate Agents President Chan Ai Cheng said OPR affects the monthly repayment of loans secured to purchase a property.

"If the amount is slight, it will not adversely affect demand.

"The recent 0.25 increase in OPR translates to about RM68 plus for a RM500,000 loan amount," she said.

When asked on what type of housing loans are affected, Chan said it affects all housing loans be it low, mid range or high end properties.

Chan further said the increase in OPR shows the government was controlling inflation and it was not specifically targetting the property sector.