OPR cut to 2.75pct a timely boost for homebuyers, homeowners, developers
Business Times, 15 July 2025
Malaysia, PropertyGuru and iProperty country manager Kenneth Soh.
KUALA LUMPUR: Clear and timely insights are critical as Malaysia's property market continues to evolve in line with demographic shifts, affordability challenges and broader economic cycles, said Kenneth Soh, country manager – Malaysia, PropertyGuru and iProperty.
He said Bank Negara Malaysia's recent decision to reduce the Overnight Policy Rate (OPR) by 25 basis points to 2.75 per cent – its first adjustment since 2023 – is a timely signal for a market that is steadily regaining momentum.
This pre-emptive move aims to support growth amid moderate inflation, lower borrowing costs across the board, and inject fresh optimism into the property market, Soh said.
According to PropertyGuru Malaysia's H2 2024 Consumer Sentiment Study, 33 per cent of respondents intend to buy a home within one to two years. Soh believes the latest OPR cut could be the catalyst needed to convert that intention into action.
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"While this rate adjustment is a promising step, shifts in consumer behaviour and market response typically take time to unfold. Nonetheless, this adjustment could mark the beginning of a more accommodative phase to support Malaysia's economic resilience. With transaction volumes holding steady and buyer confidence gradually strengthening, the latest monetary move will likely help sustain positive momentum across the property sector."
For both consumers and industry players, this cut creates meaningful opportunities to ease financial burdens and build on the steady market recovery seen over the past year, he said.
Soh added that the rate cut presents meaningful opportunities for both consumers and industry players by easing financial burdens and building on the recovery seen over the past year.
History, he noted, supports this positive outlook. When Bank Negara last cut the OPR by 25 basis points in May 2019, residential property transactions rose sharply – up 11.5 per cent quarter-on-quarter and 6.6 per cent year-on-year, according to the National Property Information Centre (NAPIC).
"This precedent highlights how monetary easing can unlock real demand in the housing market," Soh said.
He explained that the most immediate beneficiaries will be homeowners and buyers with variable-rate mortgages, who can expect lower monthly repayments.
For example, a terraced house in Kuala Lumpur priced at RM865,000 – the median price as of Q1 2025 – would typically require monthly repayments of about RM3,627 under a 30-year mortgage at 3.8 per cent with 90 per cent financing. With the OPR cut, monthly repayments could drop by about 3.03 per cent, translating into long-term savings of roughly RM39,500 over the loan tenure, assuming rates remain stable.
This relief is especially significant for first-time buyers, who consistently cite high interest rates as a major barrier to homeownership, he said.
PropertyGuru Malaysia's study found that 40 per cent of first-timers struggle to save for a down payment, with many pointing to high financing costs as a key hurdle.
Soh said the lower borrowing cost, together with initiatives like the Housing Credit Guarantee Scheme (SJKP), could encourage hesitant buyers to enter the market.
He added that current homeowners could also benefit by refinancing for better terms or upgrading to larger homes while rates are still favourable.
"Families looking to upsize or secure more flexible financing now have more room to plan," he said.
A boost for developers
Soh said developers are expected to leverage renewed buyer sentiment, particularly in the mid-range and affordable segments, where demand is most responsive to improved financing conditions.
Better affordability could translate into stronger bookings and sales, motivating developers to revive launches or roll out new incentives tailored to today's market.
Upside may also extend to the high-end segment, particularly among upgraders and investors keen to secure favourable loan terms.
Developers who offer value-driven products in well-connected, liveable locations will be best positioned to capitalise on this momentum, Soh said.
"On the flip side, Malaysia's market still has an inventory overhang in certain segments, notably condominiums and subsale units. With greater affordability, buyers may begin to absorb available stock in the secondary market, helping stabilise prices and prevent further softening in previously oversupplied areas.
"Simultaneously, in more sought-after locations such as prime suburbs, increased demand could encourage more rational price growth driven by genuine need rather than speculation. This kind of steady activity is a positive sign of a maturing market responding to real financial conditions," he said.
(Web Source: https://www.nst.com.my/property/2025/07/1244937/opr-cut-275pct-timely-boost-homebuyers-homeowners-developers)