Malaysia’s real estate market presents a mixed picture in early 2025, with modest price growth contrasting against shifting transaction volumes across different property segments. While the national house price index inched up 0.9% to 225.3 points, pushing average home values to RM486,070, overall market activity declined by 6.2% in transaction volume compared to the previous year. The residential sector remained the dominant force with 59,000 deals, though commercial and agricultural properties saw significant drops in activity.
Construction activity emerged as a bright spot, with new residential projects more than doubling to 12,498 units and serviced apartment developments skyrocketing by 100%. This surge in building activity comes despite a concerning rise in completed unsold homes, which climbed to 23,515 units worth RM15 billion. The serviced apartment segment showed improvement, with its overhang decreasing by 6.7% to 18,246 units, suggesting some market absorption of existing inventory.
Regional variations paint a complex portrait of Malaysia’s property landscape. Most states experienced moderate price increases between 0.3% and 6.9%, though Sabah, Sarawak, and Kuala Lumpur bucked the trend with declines. Johor’s serviced apartment market proved particularly resilient, benefiting from government initiatives like the Forest City financial zone and Johor-Singapore economic corridor, which helped reduce the state’s overhang rate to 5.6%.
The market’s divergent trends highlight both challenges and opportunities in Malaysia’s property sector. While construction activity and certain niche markets show promise, the persistent overhang and uneven regional performance indicate ongoing adjustments in the post-pandemic real estate environment. Government interventions appear to be yielding results in targeted areas, though broader market stabilization may require more time and policy support.