KUALA LUMPUR: The strengthening of the ringgit against the US dollar, fueled by positive macroeconomic developments and Bank Negara Malaysia's (BNM) decision to maintain the Overnight Policy Rate (OPR) at 3.00 per cent, is expected to stimulate the property market, offering an ideal opportunity for property purchases.

Kashif Ansari, co-founder and group chief executive officer Juwai IQI, highlighted that BNM's decision to keep the OPR unchanged, along with the potential for a rate cut at the upcoming Federal Open Market Committee (FOMC) meeting, is beneficial for property values and transaction volumes.

He told Business Times that stable interest rates help ensure consistent borrowing costs for both mortgages and development financing.

"This means that existing loans with floating interest rates won't see significant changes, keeping monthly repayments steady. That's good for household finances and for the industry. The expectation that rates might be cut at the next meeting also gives homeowners and buyers hope that their monthly expenses might actually fall in the future," he said.

On September 6, BNM held the OPR at 3.00 per cent, and analysts expect it to remain unchanged through the end of 2024 and into 2025.

Kashif said in the medium term, lower interest rates typically drive property prices up, as buyers paying less on their mortgages are able to spend more on their homes.

"We expect demand to continue to grow at sustainable levels. The stable interest rate environment is positive for property without causing irrational exuberance in the market," said Kashif.

Sr. Samuel Tan, a property analyst, echoed this sentiment, saying that when the OPR was reduced to a historic low of 1.75 per cent from 3.00 per cent in 2020 due to the COVID-19 pandemic, it became more affordable for new property buyers to secure home loans with lower initial interest rates.

The 1.75 per cent rate was the lowest on record, based on BNM data dating back to 2004.

As the central bank gradually increased the OPR beginning in 2022, it returned to the pre-pandemic level of 3.00 per cent by 2023, where it has remained.

BNM raised the OPR to 2.00 per cent on May 11, 2022, then to 2.25 per cent in July, 2.50 per cent in September, and 2.75 per cent in November 2022, before settling at 3.00 per cent in May 2023. This rate has been maintained through September 2024.

"With the OPR holding steady at 3.00 per cent, first-time homebuyers and those looking to expand their property portfolios can be more confident in the market's stability and Malaysia's economic outlook," Tan told Business Times.

He noted that BNM's positive assessment of global growth, resilient job markets, a recovery in both electrical & electronics (E&E) and non-E&E sectors, moderating inflation, and a less restrictive monetary environment further supports his optimism.

In a recent note, CIMB Securities projected that BNM would maintain the OPR at 3.00 per cent through the end of 2025, pending further details on RON95 subsidy plans.

Public Investment Bank Bhd (PublicInvest) highlighted that BNM's monetary policy stance, along with existing risks, aligns with their forecast of the OPR remaining unchanged.

The firm also said that the introduction of the Employees Provident Fund (EPF) Account 3, expected to inject around RM30 billion into consumer spending, could help offset rising living costs following subsidy rationalisation, though it may also contribute to inflationary pressures driven by increased demand.

https://www.nst.com.my/business/economy/2024/09/1103111/good-time-property-purchases-experts-say