KUALA LUMPUR – Malaysia’s housing market would not likely be negatively impacted by the overnight policy rate (OPR) increase.
Bank Negara Malaysia (BNM) had previously announced a hike of 25 basis points to the OPR from its historic low 1.75% to 2.00% currently. Prior to that, the 2.00% rate was the lowest recorded and was only implemented during the global financial crisis that happened between 2004 and 2020.
Co-founder and chief executive officer of Juwai IQI group, Kashif Ansari explained that the OPR increase shows a positive reflection that Malaysia’s economy is recovering.
He went on to add that the OPR increase shows BNM’s views that the country’s economy does not require the additional support of ultra-low interest rates, thus being the opposite of negatively impacting the property market.
“We expect the housing market will respond positively to expanding economy, income for households, and improve employment for this year and in 2023. The gross domestic product is projected to rise by 6.3% for 2022 and BNM is anticipating stronger domestic demands as well as increased exports,” he continued.
With that, he states that favourable economic conditions are expected to fuel the real estate market, further picking up steam in the second half of 2022 and in the coming year.
Additionally, Kashif also explained that the central bank has taken a careful step to support Malaysia’s economy even back when the country was impacted by COVID-19.
He said that inflation is high in many parts of the world but Malaysia is trying to keep it in control with headline inflation between the range of 2.2% to 3.2% in 2022.
“The rate is manageable with room for labour and commercial activities to expand substantially without causing inflation to soar,” he stated recently in a statement.
According to Kashif, there are other nations experiencing high inflation. This is caused by the increase of global commodity prices. Malaysia’s impact has been cushioned by government fuel subsidies.
In a related matter, Datuk Seri Mustapa Mohamed, Minister in the Prime Minister’s Department (Economy) had previously spoke about introducing a better fuel targeting mechanism for the lower income group although the government has not yet revealed any further information.
This is important as Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz reported that the T20 income group are currently the ones benefiting more from the current fuel subsidies.
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