KUALA LUMPUR, Jan 26 — Malaysia’s residential property market showed signs of stabilisation in 2025, with overall activity remaining largely flat as developers adopted a more cautious stance. Johor, however, stood out as the only state to record improved market confidence during the year.
According to Henry Butcher Malaysia chief operating officer Tang Chee Meng, national residential transaction volume declined by 2.75% to 187,073 units in the first nine months of 2025, while total transaction value edged down 0.3% to approximately RM77.9 billion. These figures suggest the market has reached a plateau following several years of uneven recovery.
Tang shared these insights during the media briefing for the Henry Butcher Perspective — Malaysia Property Outlook 2025 report.
He noted that Selangor and Penang, traditionally key residential markets, experienced declines in both transaction volume and value. Kuala Lumpur, meanwhile, recorded lower transaction volume but managed to post an increase in overall value — reflecting continued interest in well-located properties and commercial property in KL. Johor was the only state to register growth in both metrics.
In Johor, a total of 15,653 residential units were launched in 2025, generating transaction value of RM2.83 billion, with 3,293 units remaining unsold. Tang explained that Johor’s earlier residential overhang had weighed heavily on confidence, particularly due to vacant units from previous large-scale developments, including China-backed projects.
Market sentiment has since improved following proactive government intervention. The establishment of a special financial zone in Forest City is expected to attract corporate occupiers, which in turn may stimulate demand for office space, residential accommodation, and supporting commercial activities.
Some manufacturers have already begun housing workers within existing residential developments, including apartments in Forest City — reflecting the growing linkage between employment hubs, housing demand, and nearby industrial land developments.
Looking ahead, Tang said developers are expected to remain conservative. While around 60,000 units currently under construction are likely to be completed, new launches will be tightly controlled, typically limited to smaller projects of 200–300 units to minimise overhang risk.
Kuala Lumpur and Selangor both recorded declines in residential transaction volume in 2025. Kuala Lumpur saw transactions slip marginally to 10,249 units, while Selangor experienced a sharper decline of 5.7% to 39,583 units.
In value terms, however, Kuala Lumpur performed better, with transaction value rising 6.9% to RM9.42 billion, underscoring resilience in prime locations and integrated developments near employment centres, including areas close to office space in Bukit Jalil. Selangor’s transaction value declined 3.8% to RM22.59 billion, reflecting softer sentiment across suburban markets.
In Kuala Lumpur, about 55% of transactions were priced at RM500,000 and below, while 23% fell within the RM500,001 to RM1 million range, and 22% exceeded RM1 million. Selangor recorded a stronger skew towards affordability, with 63% of transactions below RM500,000.
New residential launches increased to 6,442 units in KL and 14,718 units in Selangor, but sales absorption weakened, highlighting cautious buyer behaviour. Selangor’s residential overhang rose 20% to 2,757 units, while Kuala Lumpur’s overhang declined significantly by 43% to 2,287 units.
Tang added that demand continues to favour compact units of around 1,000 sq ft and below, alongside niche high-end offerings and concept-driven developments. Stable economic conditions and relatively low interest rates are expected to provide ongoing support, particularly in well-connected townships near industrial property in the Subang area and factory zones in Puchong.
Penang’s residential market also softened in the first nine months of 2025, with 12,642 units transacted at a total value of RM5.7 billion. Seberang Perai accounted for 6,974 units, valued at RM2.6 billion.
On Penang island, demand remained largely driven by owner-occupiers, particularly for landed homes and mid-market strata properties. High-rise condominiums and serviced apartments, however, continued to face slower absorption.
Residential overhang on the island increased 6.2% year-on-year to 2,730 units, with total value hovering near RM2 billion. The rise was mainly concentrated in the condominium and apartment segment, where unsold units grew by 25.6% to 2,146 units.
Approximately 60% of these unsold units were priced between RM200,000 and RM500,000, indicating competitive supply pressure in certain high-rise sub-markets.
Tang added that the proposed increase in stamp duty for foreign buyers and foreign-owned companies — from 4% to 8% under Budget 2026 — may dampen marginal foreign demand in Penang island, particularly among yield-driven investors.
Foreign participation in 2025 remained selective, with stronger interest seen in rentals rather than outright purchases. This trend was evident among Malaysia My Second Home (MM2H) participants, especially in heritage and coastal locations such as Seri Tanjung Pinang, Tanjung Tokong, Tanjung Bungah, and Batu Ferringhi.
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