In its research note, MIDF Amanah said the growing loan applications should underpin developers’ earnings outlook.

“We think that the stronger buying interest is supported by a lower residential overhang in Malaysia, stable house price outlook and improving economic outlook for Malaysia,” it said.

MIDF Amanah named Mah Sing Group as its top pick for the sector, placing a ‘buy’ call on the property developer’s shares with a target price (TP) of RM1.97 due to its high exposure to the affordable residential segment, supported by strong buying demand.

It said Mah Sing continues to expand its landbank which should continue to sustain its new sales and earnings growth, adding that the property developer’s venture into the data centre would provide recurring income in the long term.

“Meanwhile, we are positive on Matrix Concepts, with a ‘buy’ call (TP RM2.05) due to the resilient sales from its Bandar Sri Sendayan township in Seremban which is supported by demand for affordable landed houses,” it said.

MIDF Amanah noted that Matrix Concepts continues to expand its landbank in Labu which would spur earnings growth beyond the financial year 2027, and offers an attractive dividend yield estimated at 5.7%.

According to Bank Negara Malaysia, total loan applications for the purchase of properties grew +3.2% year-on-year (y-o-y) to RM58.5 billion in May 2024, following a +15% y-o-y growth in April 2024.

On a monthly basis, total loan applications in May 2024 recorded double-digit growth at +10.5% month-on-month, increasing to the highest level since April 2023.