Malaysia residential loan approval ratio falls below 40% for first time since 2021
Malaysia's residential property loan approval ratio dropped to 39.1% in the first half of 2026, the lowest since 2021, as approved financing declined despite rising applications. The EdgeProp Property Market Report H1/2026 highlights a mismatch between available housing and buyer budgets, with unsol
PETALING JAYA (Nov 6): Malaysia’s residential property loan approval ratio fell to 39.1% in the first half of 2026, its first reading below 40% since 2021, according to the EdgeProp Property Market Report H1/2026. Residential loan applications rose 2.6% year-on-year to RM231.03 billion, while approvals fell 1.2% to RM90.35 billion. The approval-to-application ratio, measured by value, declined from 40.6% a year earlier.
The report cautioned that these are aggregate figures rather than matched applications and approvals, and do not establish reasons for rejection or indicate changes in regulatory lending thresholds. The financing gap comes amid a mismatch between available housing and buyers’ budgets and loan eligibility, with unsold inventory concentrated in serviced apartments and Small-office Home-office (SoHo) units.
In Kuala Lumpur, Selangor and Johor, unsold condominium units accounted for between 1.1% and 1.9% of supply. The corresponding rates for serviced apartments were considerably higher, at 7.6%, 9.5% and 13%, respectively. KL’s SoHo unsold rate stood at 21.8%, equivalent to more than one in five units. The report’s inventory figures include completed units and those under construction.
“The deeper problem lies in the product mix. In KL, Selangor and Johor, serviced apartments and SoHo units carry far higher unsold ratios than conventional condominiums. A developer adding more of the same faces existing inventory and selective lenders at once,” the report said.
Johor recorded the widest gap between supply growth and transaction activity. It added 14,697 high-rise units in 1H2026, exceeding additions for the whole of 2025, while transaction volume fell 15.7% year-on-year. Selangor added 17,316 units despite slowing its delivery, as transaction volume declined 5.4%. Penang’s overall high-rise unsold ratio fell to 6.5%, although it remained above those of KL and Selangor. Its condominium unsold rate stood at 4.5%.
The report said green credentials and smart-building features could help projects stand out, but could not substitute viable pricing and buyers’ ability to afford them. It also noted higher acquisition costs for foreign buyers following the introduction in January 2026 of an 8% stamp duty on property transfers covered by the measure. Permanent residents are exempt.
“Internationally marketed schemes may feel it, though the supplied data do not isolate the effect on sales or unsold inventory,” the report said. “Policy still favours domestic ownership, with an overnight policy rate (OPR) of 2.75%, a statutory reserve requirement (SRR) of 1.0% and stamp-duty relief on qualifying first-home purchases up to RM500,000.” However, the report noted: “Low policy rates alone cannot close the gap when the units being built do not fit household budgets or loan eligibility.” Landed homes presented a contrasting picture, with unsold rates ranging just 0.1%–1.3% across KL, Selangor, Johor and Penang.
