Property loans continue to rise, reaching RM1.23 trillion overall

KUALA LUMPUR: Bank financing to the property sector recorded strong growth of 11.9 per cent year-on-year in August 2026, with outstanding loans reaching RM134.41 billion.

Bank Negara Malaysia data compiled by BIMB Securities Research showed that financing to the property sector also increased 2.4 per cent from the previous month.

The performance outpaced overall banking system loan growth, which expanded 5.7 per cent year-on-year to RM2.45 trillion during the month.

The property sector accounted for about 5.5 per cent of total loans in the banking system as of August.

BIMB Securities Research said non-household loan growth rose to 6.8 per cent in August from 6.4 per cent in July, supported by stronger credit demand from several sectors, including property.

Other sectors contributing to the increase included transportation, storage and communications; finance, insurance and business services; and utilities.

In terms of financing by purpose, outstanding loans for the purchase of residential property reached RM925.48 billion in August, up 5.3 per cent from the same period last year.

Financing for residential property purchases remained the largest component of total banking system loans, accounting for 37.8 per cent of the RM2.45 trillion total.

On a monthly basis, financing for residential property purchases increased 0.4 per cent.

For the purchase of non-residential property, outstanding financing reached RM304.66 billion, up 7.7 per cent year-on-year and 0.4 per cent from July.

The segment accounted for 12.5 per cent of total banking system loans.

Overall, financing for the purchase of residential and non-residential property amounted to about RM1.23 trillion, based on calculations from the reported figures.

This means the two property purchase categories collectively accounted for about 50.3 per cent of total banking system loans in August.

However, BIMB Securities Research said overall household financing growth remained at 5.0 per cent year-on-year in August, unchanged from the previous month.

Within the segment, financing growth for the purchase of residential property and passenger cars moderated slightly, while loans for the purchase of securities recorded a moderate increase.

The development indicates that growth in property-related financing was uneven, with financing for the property sector recording double-digit growth while financing for residential purchases expanded at a more moderate pace.

From an asset quality perspective, the gross impaired loan (GIL) ratio for residential property purchases stood at 1.2 per cent in August, edging up from 1.1 per cent in July.

The ratio had stood at 1.1 per cent in April and May before rising to 1.2 per cent in June and returning to 1.1 per cent in July.

For non-residential property purchases, the GIL ratio remained at 1.4 per cent in August, unchanged from June and July.

It was lower than the 1.5 per cent recorded in April and May.

By comparison, the overall banking system's GIL ratio remained at 1.4 per cent in August, despite total system impaired loans increasing 1.2 per cent from the previous month.

BIMB Securities Research said the banking system's overall asset quality remained stable, with the GIL and net impaired loan (NIL) ratios unchanged at 1.4 per cent and 1.0 per cent, respectively.

For the construction sector, which is closely linked to the property development value chain, outstanding loans stood at RM104.99 billion in August.

Financing to the sector grew 8.7 per cent year-on-year, despite a marginal 0.1 per cent monthly decline. It accounted for 4.3 per cent of total banking system loans.

However, the construction sector recorded a GIL ratio of 4.4 per cent in August, unchanged since June and slightly lower than the 4.6 per cent recorded in April.

The figure was higher than the overall banking system's GIL ratio of 1.4 per cent.

Overall, the BIMB Securities Research report showed that property-related financing continued to be a key component of banks' loan portfolios, particularly residential property financing, which alone accounted for nearly two-fifths of total loans.

At the same time, the 11.9 per cent growth in financing to the property sector indicated a faster pace of expansion compared with overall banking system loan growth of 5.7 per cent in August.