BANK Negara Malaysia’s (BNM) decision to lift the Overnight Policy Rate (OPR) by 25 basis points to 2% recently will not negatively affect the housing market in 2022 and 2023.

According to Juwai IQI group co-founder and CEO Kashif Ansari, BNM has taken a careful step in supporting the nation’s economy even during the worst of the pandemic.

“Inflation is on a rampage in many parts of the world, but it is not on a rampage in Malaysia with headline inflation will likely be somewhere between 2.2% and 3.2% this year,” he was reported as saying by Bernama.

“That is a manageable rate. There is still room for employment and business activity to grow significantly without causing inflation to surge.”

Kashif noted that other countries were experiencing very high inflation due to the spike in global commodity prices while Malaysians were spared as the Government was providing fuel subsidies.

In the wake of the global financial crisis between 2004 and 2020, he also pointed out that Malaysia’s OPR only dropped as low as 2% during eight quarters, hence, the past two years represented the first time in history that the rate was as low as 1.75%.

Kashif went on to say that rather than creating a risk for the housing market, the increase in the OPR to 2% was a reflection of the economic rebound, reflecting BNM’s view that the economy no longer needed the extra support of ultra-low interest rates.

“We believe the housing market will react positively this year and in 2023 to the growing economy, household income, and employment with the gross domestic product expected to climb as much as 6.3% this year,” he justified.

“The bank is projecting stronger domestic demand and higher exports. Therefore, we expect positive economic conditions to drive strength in the real estate market that will really gather pace in the second half of this year and in 2023.” – May 18, 2022

https://focusmalaysia.my/report-opr-increase-will-not-negatively-affect-malaysias-housing-market-says-expert/