Malaysia’s Detached Home Prices Expected to Decline in 2024, Link Houses to Rise

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The inaugural Malaysian House Price Index (MHPI) released today suggests that terrace homes are poised for appreciation in 2024, while detached houses may continue to experience a decline, according to forecasts by the Centre for Real Estate Research at the Faculty of Built Environment of Tunku Abdul Rahman University of Management and Technology (TAR UMT).

The MHPI forecasts that terrace homes will outperform other residential home types, with an anticipated annual growth of 2.77 percent. This growth aligns closely with the long-term inflation rate of 3.0 percent, providing a cushion against escalating prices. Semi-detached and high-rise home values are expected to see more modest growth rates of around 0.57 percent and 0.45 percent, respectively.

Conversely, detached home values are projected to decline by -1.62 percent. These predictions were derived using the autoregressive integrated moving average (ARIMA) forecasting technique, which analyzes past values to predict future trends.

Overall, the MHPI is expected to trend upwards, with a moderately positive annual growth rate of 0.64 percent anticipated for 2024.

Prof Ting Kien Hwa, the adviser for the center, emphasized the importance of these forecasts in empowering home buyers, sellers, investors, and policymakers to navigate the housing market with confidence. He highlighted the role of HPI forecasts in aiding policymakers to make informed decisions, such as adjusting interest rates, introducing tax incentives, and implementing targeted interventions based on projected market trends.

According to Assoc Prof Cheng Chin Tiong, head of the Centre for Real Estate Research at TAR UMT, consistent and foreseeable movements in the HPI are crucial for maintaining overall financial stability. He cautioned against sudden and extreme fluctuations, which can have ripple effects on financial institutions, businesses, and individuals. He noted that analyzing HPI forecasts over a full property market cycle can provide valuable insights, such as identifying potential bubbles or signaling economic downturns.