Rising interest rates would not hurt the housing market this year or in 2023, according to Juwai IQI Group co-founder and chief executive officer Kashif Ansari.
Kashif believes the recent action by Bank Negara Malaysia to raise the Overnight Policy Rate (OPR) by 25 basis points to 2.00 per cent will have no detrimental impact on the property sector.
"Will rising rates destroy the housing market in 2022 or 2023? The answer to that question is no. Bank Negara is taking away, careful step by careful step, the extra support it gave to the economy during the worst of the pandemic," he said.
During the Global Financial Crisis, the OPR fell as low as two per cent for eight quarters between 2004 and 2020, he noted.
Kashif said that the past two years represent the first time in history that the OPR has been as low as 1.75 per cent.
"Even at two per cent, it remains very low by historic standards. Rather than creating a risk for the housing market, the increase in the OPR to two per cent is a reflection of the economic rebound. Bank Negara clearly feels that the economy no longer needs the extra support of ultra-low interest rates.
"As we've said before, we believe the housing market will react positively this year and in 2023 to the growing economy, household income, and employment," he said in a statement.
Further, he said that the country's gross domestic product (GDP) is expected to climb as much as 6.3 per cent this year.
"The bank is projecting stronger domestic demand and higher exports. We expect positive economic conditions to drive strength in the real estate market that will really gather pace in the second half and in 2023," he said.
Kashif said inflation is on a rampage in many parts of the world, but not in Malaysia.
According to him, headline inflation in Malaysia will likely be somewhere between 2.2 per cent and 3.2 per cent this year.
"That is a manageable rate. There is still room for employment and business activity to grow significantly without causing inflation to surge. Yes, it's true, some other countries are undergoing very high inflation. Just look at the United States. However, the situation in Malaysia is different. Inflation here is manageable and is mostly a result of increases in global commodity prices. Malaysians are protected from the worst of commodity prices by the fuel subsidies," he said.