KUALA LUMPUR:Property developers are poised to see higher sales this year after three consecutive months of year-on-year increase in approved loans, said MIDF Research.
Based on Bank Negara Malaysia’s monthly statistics, approved loans for the purchase of property had increased three per cent year-on-year to RM11.3 billion.
This was mainly driven by the 20 per cent increase in loan application, which implied that demand had improved significantly.
In the first quarter, approved loans grew nine per cent to RM28.62 billion.
“This is a good leading indicator that property transaction value has increased and, hence, property developers’ sales should naturally improve,” said MIDF Research in a report yesterday.
According to the National Property Information Centre (Napic), property market transactions had improved 60 per cent quarter-on-quarter and 38 per cent year-on-year to RM49.6 billion in the fourth quarter of last year.
By segment, the highest growth was seen in commercial properties priced above RM1 million.
MIDF Research believed that the Napic data reflected demand recovery among consumers due to a stable ringgit and employment outlook.
It also said the latest publication from Malaysian Institute of Economic Research showed that the Consumer Sentiment Index in the first quarter had improved to 76.6 from 69.8 in the fourth quarter of last year.
“We gather that consumers are generally more optimistic and have indicated their cautiously ambitious spending plans,” said MIDF Research.
The House Price Index, meanwhile, remained positive as it grew 5.6 per cent year-on-year to 243.3 in the fourth quarter, although it was lower than the five-year average of 9.1 per cent.
Among the key states, the highest year-on-year growth was recorded in Selangor (8.2 per cent), followed by Johor (7.7 per cent), Kuala Lumpur (5.3 per cent) and Penang (0.7 per cent).
MIDF Research upgraded the sector to “positive”, with SP Setia Bhd as its top pick.
It recently upgraded SP Setia to “buy” due to positive news flow surrounding the I&P Group Sdn Bhd deal and good dividend yield of five per cent.
Other stocks with “buy” calls are Eco World Development Bhd and Eastern & Oriental Bhd.
UOA Development has been downgraded to “neutral” due to limited upside.
Besides, its share price had risen 14 per cent since MIDF Research last upgraded the stock on November 24 last year.