How to do a simple property market analysis?

Is there a way to know what the property market is going to do?

Most investors ask this question when they try to figure out how to know where the property market is headed. Although there is no way to know the future, there are numerous ways we can analyse the past and make some educated prediction as to the future of the property market.

This post shares a generic yet simple way to analyse property market.

Why is it so important?

A property market analysis is a study of current market situation and trend, that helps you understand the market conditions of your property. Constantly update yourself with such conditions allows you to adjust investment strategy promptly, if necessary.

Such analysis may not be done on a daily or weekly or even monthly basis, however, since property market is not as volatile as stock market. Three to four times a year are considered frequently done.

The main purpose to analyse the property market is to spot any change in the market trend. As it will take some years for a property market trend to change, property investors always stick on the same investment strategy for years before a change in market trend.

For example, if the market is on an uptrend and this trend has just started, an investor who prefers to flip property in short term can continue to do so in the next few years to come. If the market is on a downtrend, an investor who is building up a portfolio of cash-flow-generating properties will be busy accumulating properties for some years.

Systematic monitoring of property market are therefore very important for investors to know when they should stop doing whatever they are doing with the property and start planning their long vacation, or, when they should wake up from hibernation.

What to analyse?

We have categorised the major factors affecting housing market trend into two: Primary factors and Secondary factors. Primary factors are those determine the fundamentals of the economy – supply, demand and inventory. Secondary factors are the driving forces that thrust a trend to develop or continue – job market, consumer confidence and finance. Details of these factors together with some available sources of data are summarised as follows:

Primary factors

  1. Supply

The existing inventory represents the most easily identifiable component of supply. There are other more subtle indications of supply, however, that must also be taken into account. Properties under construction, properties planned, or properties that are capable of being converted all represent supply alternatives.

Every 3 months National Property Information Centre (NAPIC) releases data of housing supply on its website (under Residential Property Stock Tables). This data can be grouped into current and future supplies. Current supply involves number of units completed, starts and under construction in every quarter of a year. Future supply consists of planned supply, new planned supply and incoming supply filed with the authority.

Source of data:


  1. Demand

Demand relates to absorption of a particular product in a defined area. Absorption is best described as the change (positive or negative) of sold units over a specified period of time.

From time to time, Real Estate & Housing Developers’ Association Malaysia (REHDA) releases updates of market information and property industry survey through bulletin feature articles. Data of sales performances and launches from the survey is a quick reference to the change in housing demand.

Source of data:

NAPIC’s website will also update property sales data in a more detailed manner according to areas/states. In performing a demand analysis, it usually starts with a broad market such as the entire country, then continually condenses the analysis into a smaller, well-defined area such as Klang Valley, Penang and Johor Bahru.

Source of data:


  1. Inventory

The change in total unsold units depicts the end result of mismatch between supply and demand. Unsold units tend to increase when the market is oversupply and to drop when undersupply. NAPIC releases property overhang data quarterly together with numbers of unsold under construction units and unsold not constructed units. The sum of these units denotes the overall unsold stocks in the market.

Source of data:


Secondary factors

  1. Job market (Income)

The job market is the market in which employers search for employees and employees search for jobs. The job market is directly related to the unemployment rate and household income. The correlation between areas with high unemployment and underperforming property prices is hardly surprising. Clearly demand to live in those areas is likely to be lower. Most people will aspire to live in areas with better job opportunities. These areas normally provide better social conditions while the residents have higher disposable income to spend. Some indicators that show the conditions of job market include unemployment rate, job vacancies, business confidence and bankruptcies.


Unemployment rate

Unemployment rate measures the number of people actively looking for a job as a percentage of the labour force. The following link provides data of unemployment rate from Department of Statistics Malaysia – actual data, historical chart and forecast.

Source of data:


Job vacancies

Job vacancies are the total number of vacant jobs available in the market. The following link provides job vacancies data from central bank of Malaysia – actual data, historical chart and forecast.

Source of data:


Business confidence

Business Conditions Index survey covers 11 industries represented by 350 manufacturing businesses incorporated locally and overseas. Questions posed in the survey cover production level, new order bookings, sales performances, inventory build-up and new job openings. A value above 100 indicates expected improvement in conditions, a value below 100 shows lack of confidence and 100 indicates neutrality. The following link provides business confidence data from Malaysia Institute of Economics Research – actual data, historical chart and forecast.

Source of data:



Bankruptcies account for insolvents who cannot repay their debts to creditors and carry on with their business. It is one of the important indicators that reflect the strength of businesses in the market to generate new jobs. Higher bankruptcies mean weaker capability to create new jobs and vice versa. The following link provides bankruptcies data from central bank of Malaysia – actual data, historical chart and forecast.

Source of data:


  1. Consumer confidence (Expense)

Consumer confidence is a gauge of the overall health of the economy as determined by consumer opinion. Consumer confidence takes into account an individual’s feelings toward his or her own current financial health, the health of the economy in the short term and the prospects for longer term economic growth. It signifies the willingness of individuals to expand or cut down their expenditures in near future. When consumer confidence is less positive, markets typically react bearishly and vice versa. Consumer confidence in housing market can be observed through three key indicators: consumer price index (inflation rate), consumer sentiments index and house price index.


Consumer price index (inflation rate)

Inflation is one of the most influential factors that affect the consumer confidence. Consumers tend to cut down their spending when they feel the pain in increasing prices. In Malaysia, the most important categories in the consumer price index are Food and non-alcoholic beverages (30% of total weight) and Housing, water, electricity, gas and other fuels (23% of total weight). Others include: Transport (15%); Communication (6%); Recreation and culture (5%) and Furnishings, household equipment and routine household maintenance (4%), Restaurants and hotels (3.2 percent and miscellaneous goods and services at (6.3%). The following link provides Malaysia inflation rate from Department of Statistics Malaysia – actual values, historical data, forecast, chart, statistics, economic calendar and news.

Source of data:


Consumer sentiments index

The Consumer Sentiments Index survey is conducted quarterly on a sample of over 1200 households. Respondents are asked to evaluate on their household’s current and expected financial positions and their employment outlook. Questions relating to plans to buy houses, new or used cars and other major consumer durable are also asked. A value above 100 indicates expected improvement in conditions, a value below 100 shows lack of confidence and 100 indicates neutrality. The following link provides Malaysia Consumer Sentiments Index from Malaysia Institute of Economics Research – actual data, historical chart and forecast.

Source of data:


House price index

House Price Index is measured by the annual change in the house prices. House prices on average increase every year at different rates when the economy is good. Annual increment of house prices reduces (or sometime a decrement) when the economy is turning bad. Thus, fluctuation in house price index is usually in line with consumer sentiments index. The following link provides Malaysia House Price Index from central bank of Malaysia – actual data, historical chart and forecast.

Source of data:


  1. Finance

Access to finance is probably the most influential factor to property market as most people have to finance their property purchases. The ability of individuals or enterprises to obtain financial services, including credit and mortgage loan, determines the liquidity of capital required in a property market. Market will slow down if the credit available to buyers is drying up. We can assess the ease of access to finance by observing the change in bank lending rate, interbank rate and loan rejection rate.


Bank lending rate

The bank lending rate is the average rate of interest charged on loans by commercial banks to private individuals and companies. Most property investors, especially homeowners, focus on changing mortgage rates because they have a direct influence on real estate prices. However, interest rates also affect the availability of capital and the demand for investment. As investors foresee increased variability in future rates or increase in risk, risk premiums widen, putting increased downward pressure on property prices. The following link provides Malaysia Bank Lending Rate from central bank of Malaysia – actual data, historical chart and forecast.

Source of data:


Interbank rate

The interbank rate is the rate of interest charged on short-term loans made between banks. As interbank rates decrease, the cost of funds is reduced and funds flow into the system; conversely, when rates rise, the availability of funds decreases. As for real estate, the changes in interbank lending rates either add or reduce the amount of capital available for investment. When capital availability is tight, capital providers tend to lend less. This means that loans are made at lower loan to value ratios, thus reducing leveraged cash flows and property values. The following link provides Malaysia Three Month Interbank Rate from Maybank Group – actual data, historical chart and forecast.

Source of data:


Loan rejection rate

Rejection of a mortgage loan application by the prospective lender usually comes as a result of the borrower’s perceived inability to pay back the loan. However, if the overall rejection or denial rate is increasing or decreasing significantly, it signifies a prominent change of credit and capital available to the market. REHDA includes some update of mortgage loan rejection rate in their reports from time to time.

Source of data:


Though the above analysis is not extensive, once we have an idea of changes in all of the above factors, we can better understand the overall property market conditions and then predict where the property market is heading to. Now give it a try and start gathering all these data, have a look into them and see what they can tell you. You will soon realise that you don’t need a crystal ball anymore to tell you what is going to happen in property market.



About The Author


Coming from a humble little town named Tangkak in north Johor state of Malaysia, I am so lucky to have chances to learn and work both in Johor Bahru and Singapore - a conurbation with 6.49 million still fast growing population - since year 1996. Hope now I can have a chance to contribute back to the community by sharing what I see, what I know and what I learn in this wonderful place.


  • Simmy

    Reply Reply April 27, 2016

    Hi ong, i am a singaporean pr looking at investing in sebana cove resort. The bungalows there are priced around RM1.7m for 8400 square feet. Will it be a good investment cause it says that there will be expecting high expat traffic flow due to the RAPID project. Would be grateful if you can drop me an email. Thank you

  • BC Tan

    Reply Reply July 15, 2017


    Is it true that the Malaysia property market (especially MELAKA) reach the lowest point now? Is it the time to invest in malaysia property market now

    Thank you.

    • ongkl

      Reply Reply July 16, 2017

      Hi BC,

      Latest data available does show that Malaysia property market may have hit the bottom. However it may be too soon to tell that the worst time is over as the bottoming period may be extending or it can be a double dip situation coming up.

  • alex

    Reply Reply August 24, 2018

    do u know who i can look for,

    if i got oil palm plantation for sales


  • Ryan

    Reply Reply May 20, 2019

    Great post! I think a lot of people forget to look into a lot of these issues before asking themselves what the market is actually like. Seems people rather conclude current market sentiment based on what everyone else is saying rather than looking into these key factors that you’ve identified.

  • Hoei Huang

    Reply Reply March 3, 2020

    Great Post

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