Why KL Property Prices Are Still Going Up Even Though Fewer People Are Buying
- Jul 30
- 5 min read
If you've been watching the Malaysian property market lately, you might have noticed something that doesn't quite add up.
Fewer people are buying property. Transaction volumes are down. Loan rejections are at record levels. And yet — property prices are still going up.
How does that make sense?
It's a fair question, and it's one that's confusing many homebuyers and investors right now. The answer isn't simple, but it's important to understand — especially if you're planning to buy or sell property in KL in 2026.
First, Let's Look at the Numbers
According to NAPIC/JPPH data for Q1 2026, overall property transactions in Malaysia fell by 8% year-on-year to 89,966. Yet the Malaysian House Price Index still rose 1.7% over the same period, with the average home price climbing to RM507,533 — up from RM494,384 in Q3 2025.
In plain English: fewer people bought property, but the ones who did paid more for it.
That gap — falling volume, rising prices — is the defining tension in Malaysia's property market right now. And understanding why it's happening can help you make smarter decisions.
Reason 1: Loan Rejections Are Keeping Buyers Out, Not Pushing Prices Down
The biggest reason fewer transactions are happening is not that people don't want to buy. It's that they can't get the loan approved.
According to REHDA's Property Industry Survey released in March 2026, a staggering 72% of developers reported financing difficulties in the second half of 2025, with 83% experiencing end-financing issues. For properties priced between RM500,001 and RM700,000 — one of the most sought-after segments — loan rejection rates ranged from 31% to 45%.
The result is a buyer pool that's been artificially squeezed. The people who do get approved tend to be financially stronger — stable income, lower debt commitments, cleaner credit history. These approved buyers are competing for the same limited supply of good properties, and that competition keeps prices firm.
So paradoxically, high loan rejection rates are actually protecting prices, not bringing them down.
Reason 2: Supply of Good Properties Is Genuinely Constrained
You might have heard that Malaysia has a property overhang — tens of thousands of unsold units sitting empty across the country. In Q1 2026, that figure stood at over 32,000 unsold completed residential units nationally, plus another 19,263 unsold serviced apartments.
But here's what that headline number hides: the overhang is heavily concentrated in specific segments. Most of those unsold units are high-rise condominiums and serviced apartments priced above RM500,000, particularly in KL city fringe areas like Bukit Bintang, Cheras, and parts of Bangsar South — built during an overbuilding cycle between 2013 and 2018 that never matched real buyer demand.
Meanwhile, landed properties in well-connected locations — terraced houses and semi-detached homes near good schools, highways, and transit lines — remain genuinely undersupplied. These are what most Malaysian families actually want to buy, and there simply aren't enough of them in the right places. That scarcity supports pricing.
Reason 3: Construction Costs Are Pushing New Property Prices Higher
Developers don't sell at a loss. And when the cost of building goes up, the selling price follows.
Construction costs in Malaysia have risen significantly, driven by higher prices for steel, cement, and copper — pressure that has been compounded by global supply chain disruptions and geopolitical tensions in 2025 and 2026. The Real Estate and Housing Developers' Association (REHDA) president noted that residential prices are expected to rise around 1–2% in 2026 even in a cautious environment, partly because 2–3% construction cost inflation makes it impossible for developers to hold prices flat.
This cost floor doesn't disappear even when buyer demand weakens. Developers would rather moderate new launches — or delay them — than sell at prices that don't cover costs. And fewer new launches mean less supply entering the market, which again supports existing prices.
Reason 4: Sellers Aren't Desperate Enough to Drop Prices
In a market where prices are falling, sellers typically need to be motivated to reduce. Right now, most Malaysian homeowners are not in that position.
Interest rates remain stable — Bank Negara Malaysia has maintained the Overnight Policy Rate (OPR) at 2.75% since mid-2025, keeping mortgage repayments manageable for existing homeowners. Inflation is subdued at around 1.6%. Most sellers are not in financial distress, so they're holding their asking prices.
The combination of affordable holding costs and no urgent need to sell means supply stays tight, even as fewer buyers are transacting. Prices only fall sharply when sellers are forced to sell. That pressure isn't here yet for most KL homeowners.
Reason 5: The Right Locations Are Still in Demand
Not all KL property is equal — and the market is making that clearer than ever in 2026.
Properties near transit infrastructure (existing MRT and LRT lines, and increasingly near the planned MRT3 Circle Line corridor) continue to attract demand from a core group of serious buyers. Areas like Damansara Heights, Bangsar, TTDI, and Desa ParkCity have historically held their value well precisely because of strong connectivity and quality of life. That underlying demand doesn't evaporate when market activity slows — it just becomes more selective.
The market isn't rising everywhere. It's rising in the right places, while weaker locations face flat or declining prices. Broad headlines don't tell you that story.
So What Does This Mean for You?
If you're a buyer: The current environment is actually more favourable than the headlines suggest. Loan rejections are blocking competition from other buyers. Unsold inventory in certain segments gives you negotiating power. And interest rates remain historically low for those who can secure financing. The key is to sort your loan eligibility first — ideally get an Approval-in-Principle before you start shopping seriously, especially if you're looking in the RM500,000–RM700,000 range.
If you're a seller: Prices are holding in well-located properties, but the buyer pool is thinner. Overpricing your unit in a slow-moving market means sitting on it for months. A realistic asking price, backed by current market data, will attract the qualified buyers who are still out there.
If you're an investor: The gap between oversupplied high-rise units and scarce landed property is one of the clearest signals the market is sending right now. Chasing yield in an oversupplied corridor is a different risk profile from owning a well-connected landed home in a sought-after neighbourhood.
The Bottom Line
Rising prices and falling transactions aren't a contradiction — they're two sides of the same market reality. When fewer buyers can access financing, the ones who do are better qualified and more competitive. When supply stays constrained in the segments people actually want, prices hold firm. And when sellers aren't forced to sell, they don't.
Understanding this helps you cut through the noise and make decisions based on what's actually happening — not just the headline numbers.
👉 If you're navigating the KL property market in 2026 and want to understand how these trends affect your specific situation, Ascons Real Estate is here to help. Our team works with buyers, sellers, and investors across Kuala Lumpur and can give you an honest, data-backed read on what your property is worth — or what you should be paying.
Kenms Ang
+60 19-686 2265
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