Tide turns for Malaysian property sector: Developers' optimism plunges as costs, taxes and financing woes mount
KUALA LUMPUR (Sept 19): The Malaysian property development sector is seeing a sharp reversal in sentiment, with optimism among developers plunging and key indicators pointing to a cooling market heading into 2026.
Developers who were expecting more sales heading into 2025 have now changed their tune with construction costs, financing and the sales and service tax (SST) topping their list of concerns for those surveyed in the first half of 2025.
The Real Estate and Housing Developers’ Association (Rehda) Malaysia's latest property industry sentiment survey found that only 19% of respondents expressed optimism about the property market, a sharp drop from 51% recorded six months earlier.
Confidence in sales performance also fell, with just 19% of developers feeling positive compared to 52% previously. A total of 137 chief executive officers and top management personnel of property companies in Peninsular Malaysia were surveyed from June to August 2025.
Presenting the findings at a media briefing, Rehda president Datuk Ho Hon Sang revealed a notable decline in market sentiment in the first half of 2025. Just six months prior, overall optimism among developers was at its highest level in five years.
Its property industry survey of 187 developers in Peninsular Malaysia from June and August showed that falling optimism is leading developers to scale back, with only 41% planning to launch new projects in the second half of 2025, down from 56% earlier. Land purchases have also slowed, with 62% not planning to buy new land — a reverse from the 70% who intended to expand previously.
Developers cited several key challenges, including construction-related issues, particularly involving building materials and labour, broader economic uncertainties, the impact of the SST and end-financing difficulties faced by potential buyers.
In the first half of 2025:
- 59% of developers faced construction issues.
- 51% were affected by weak economic conditions.
- 62% said the SST would significantly raise project costs.
- 70% expected SST to increase construction costs by at least 3%.
- 73% planned to raise property prices, mostly by 3% to 5%.
Financing was also a major issue:
- 71% of developers faced financing problems.
- 64% said buyers had trouble getting loans due to rejections or not meeting requirements.
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