In Malaysia’s largest-ever budget allocation of RM421 billion, Budget 2025 has primarily favored the education and healthcare sectors, with comparatively fewer incentives directed toward the property sector. According to Henry Butcher Malaysia, the allocation offers key benefits for first-time home buyers and the B40 income group but leaves the M40 relatively underserved.
While developers’ pre-budget proposals received limited adoption, Henry Butcher Malaysia remains optimistic about the property sector’s growth, driven by anticipated economic expansion.
Key Measures Impacting the Property Sector in Budget 2025
1. Tax Relief for First-Time Homebuyers
- A notable benefit is the individual tax relief on housing loan interest payments, aimed at boosting first-time homeownership.
- This tax relief applies to sale and purchase agreements signed between January 1, 2025, and December 31, 2027 for first residential home loans.
2. Affordable Housing Initiatives
- RM900 million will support public housing developments under the People’s Residency Programme (PRR) and Rumah Mesra Rakyat (RMR) projects, aiding lower-income Malaysians in securing affordable housing options.
3. Infrastructure and Economic Zones to Drive Demand
- Significant infrastructure projects, including the Pan Borneo Highway, Penang LRT, and airport expansions in Penang, Tawau, and Miri, are expected to raise property values and boost demand in adjacent areas.
- The creation of the Johor-Singapore Special Economic Zone (JS-SEZ) could particularly benefit Forest City, potentially increasing occupancy rates and advancing the development of upcoming project phases.
4. Increased Tourism Funding to Boost Hospitality and Retail
- Expanded tourism funding aims to attract more inbound tourists, enhancing hotel occupancies and shopping mall footfall. Increased tourism spending is expected to positively impact hotel values and occupancy in prime locations.
5. Higher Allocations for Sabah and Sarawak
- With substantial allocations for East Malaysia, including Phase 2 of the Sabah-Sarawak Link Road and infrastructure upgrades, economic growth is anticipated, potentially uplifting the property market and local real estate sentiment.
Summary of Key Impacts on the Property Sector
Although Budget 2025 isn’t heavily property-focused, several measures support affordable housing and the larger economy, which could indirectly benefit the sector. Infrastructure projects and the JS-SEZ initiative could foster demand and property value growth in strategically located areas, while tax incentives provide a push for first-time buyers.
