PETALING JAYA: The demand for residential property remains resilient and the pent-up demand will result in improving sales in the first to the third quarter of 2023 in the segment, said property consultancy Savills Malaysia.

Group MD and head of Savills Malaysia Paul Khong said there will be those who will continue to take advantage of the “still-low” mortgage costs.

The benchmark overnight policy rate (OPR) currently stands at 2.75%, after four consecutive hikes of 25 basis points (bps) from a low base of 1.75% at the start of 2022.

Khong, however, noted that challenges are there as Bank Negara Malaysia (BNM) may raise the OPR above the pre-pandemic level (3.25% – 3.50%) depending on the global situation. At 3.25%, the OPR will be back to pre-pandemic levels.

The rising cost of buying a house could impact the purchasing power of potential buyers in the coming years, he said in a statement.

He also acknowledged that construction costs and higher loan rates have dampened the real estate sector and the overall domestic economy. This has resulted in a major cost-push effect on new developments, and will eventually result in a higher price tag for new products.

On the overall property market, Khong said it will be a direct extension of 2022 and that the bumpy ride will move into 2023 but with a stronger positive bias.

Savills Malaysia said older offices and retail properties are likely to struggle while newer properties in the industrial, logistics and data centre segment will continue to be “in the limelight” of market activities.

It said with the new government, there will hopefully be better support for a strong landing. The property consultancy awaits the new Budget 2023 with anticipation for measures to rejuvenate the entire sector and not just goodies for those in the bottom 40.

Savills also sees a global trend in environmental, social, and governance (ESG) issues being embedded deeply into investment decisions.

“This awareness is also growing in Malaysia,” Khong noted.