Malaysia's first-quarter 2026 property market data, released on 14 May by the Valuation and Property Services Department (JPPH) through the National Property Information Centre (NAPIC), describes a market that has shifted from breakneck pricing to cautious balance. Headline values held firm at RM51.9 billion while transaction volume slipped 8% year-on-year, and unsold completed homes crept past 32,000 units worth RM16.37 billion.

The headline numbers

NAPIC recorded 89,966 transactions in 1Q2026, with total value at RM51.9 billion, according to figures carried by EdgeProp.my citing JPPH. Volume fell 8% against 1Q2025 while value dipped a marginal 0.6%, an indication that average ticket sizes lifted even as fewer deals closed. The split between volume and value is the more telling reading: it confirms that the deals which did clear in 1Q2026 sat at the higher end of each segment, while marginal stock and over-priced listings were left behind.

The Malaysian House Price Index (MHPI) rose to 235.2 points, a year-on-year gain of 1.7%, taking the national average house price to RM507,533 per unit. That increase is well within the 1% to 2% range REHDA flagged in March as the realistic upside for 2026, with developers absorbing a 3% to 6% rise in construction costs reported in the 2H2025 industry survey carried by The Edge. With construction inflation tracking above headline house-price growth, gross margins for developers carrying older landbanks compress meaningfully - a structural pressure that informs the deliberate slowdown in new launches.

The overhang line is where the data turns harder. Unsold completed residential units climbed to 32,801, valued at RM16.37 billion - a 7.6% quarter-on-quarter rise in volume. New launches in the quarter totalled 9,112 units, with a sales rate of just 11.5% at the three-month mark. Condominiums and serviced apartments continue to dominate the stock that is sitting unsold, mirroring the structural problem flagged in late-2025 NAPIC releases. The overhang is no longer simply a Klang Valley high-rise story - it has spread to suburban condos in Johor and to Penang Island's mature high-rise belt, where new RTS- and SEZ-driven demand has not absorbed legacy stock as quickly as headline narratives suggest.

State-level performance diverged. Penang's house price index climbed to 225.9 points in 1Q2026, a 3.7% year-on-year gain that more than doubled the national pace, according to data summarised by Penang Property Talk. Terrace houses were the standout: Seberang Perai's terrace index hit 267.1 while Penang Island's stood at 155.5, with mainland demand absorbing the lion's share of activity. The Klang Valley still led on absolute transaction volume and value, with Kuala Lumpur and Selangor together accounting for the bulk of the national RM51.9 billion total, but the rate of price gain was lower than Penang's.

Why it matters for Malaysian readers

For first-time buyers, the data points to a window that remains workable rather than punishing. The Overnight Policy Rate has stayed at 2.75% since the May Monetary Policy Committee meeting per Bank Negara Malaysia, and the full stamp duty exemption for first-time buyers purchasing properties up to RM500,000 has been extended until 31 December 2027. With the national average at RM507,533, a substantial slice of the inventory still qualifies for the relief - provided buyers shop disciplined, particularly in Klang Valley and Penang where average pricing crosses the threshold. Budget 2026 has also topped up the Housing Credit Guarantee Scheme (SJKP) to RM20 billion, which NAPIC notes is targeted to benefit roughly 80,000 homebuyers including gig workers and freelancers without traditional payslips.

For sellers in the secondary market, slower volume is the bigger headline than weaker prices. An 8% drop in transactions against a 0.6% dip in value implies that the deals that did clear were higher-quality stock - well-located, well-priced. Owners holding average-positioned inventory should expect longer time-on-market and sharper buyer negotiation rather than dramatic price cuts. Listings priced 5% to 8% above recent comparables are now sitting visibly, and the chain effect is starting to show: longer time-on-market for upgraders is slowing entry-level absorption as well.

The overhang figure deserves the most careful reading. At 32,801 units, the country is once again carrying a stockpile dominated by high-rise inventory built in earlier cycles. Most of that is concentrated in Johor and Penang's island segment, and a large share is priced above RM500,000 - outside the band where federal demand incentives bite. For buyers willing to look at completed condos, this is the segment where developer rebates, furnishing packages, and stamp duty absorption are most negotiable. Several developers carrying legacy projects have already opened the door to 5% to 8% effective discounts, packaged as fit-out credits or absorbed legal and SPA fees, rather than headline price cuts that would re-anchor the entire scheme.

The investor angle also looks materially different from a year ago. With OPR at 2.75% and rental yields on landed terraces in mature suburbs holding around 3.5% to 4.5%, the cash-flow case for owner-occupier upgraders is more attractive than for pure rental investors. The 1.7% MHPI move alone is too thin to underwrite a leveraged buy-to-let position in 2026 - buyers entering for yield will need to look harder at sub-segment data such as Penang's terrace index or Klang Valley shop-office data than at headline numbers.

Editorial commentary

The 1Q2026 numbers vindicate a thesis that has been forming since late 2025: Malaysia's property cycle has decoupled from the headline price index and is now telling its story through volume, overhang and sales rate. A 1.7% MHPI gain looks tame, but it sits on top of a market where developers are deliberately throttling launches - only 9,112 new residential units in three months - to protect pricing power. That is rational behaviour, but it pushes more weight onto the existing overhang, and it means buyers who are waiting for a broad price reset will likely wait a long time. The reset, where it occurs, will happen project-by-project, not as an index move.

The Penang outperformance is the most actionable signal in the release. Seberang Perai's terrace index at 267.1 reflects sustained owner-occupier demand on the mainland, drawn by industrial-driven employment from the Batu Kawan and Kulim semiconductor belt, and relative affordability against the island. Rummah News expects the next two quarters to widen the Penang Island-Seberang Perai gap further before the upcoming Penang LRT timeline narrows it. The opposite story - Johor's overhang - will not resolve as cleanly. JS-SEZ optimism is real but it is concentrated in industrial, logistics and selected high-rise nodes near the RTS terminus, not across the legacy condo stock that built up between 2017 and 2022.

Practical takeaway

If buying in the RM500,000-and-below band, the stamp duty exemption remains live until 31 December 2027 - use the JPPH average price of RM507,533 as your discipline anchor.
For completed condos in overhang zones, ask explicitly for stamp duty absorption, free renovation packages, or rebates of 5% to 8% - developers are carrying RM16.37 billion in unsold completed stock and have room to move.
If selling in 2Q2026, price 2% to 3% below the most recent comparable transaction to clear within 90 days; the 8% volume drop says realistic pricing wins, optimistic pricing waits.
Penang mainland (Seberang Perai) terrace houses are the strongest segment in the data - buyers looking for owner-occupier resilience should shortlist Bukit Mertajam, Simpang Ampat and Batu Kawan.
Use the Rummah loan qualifier to recalibrate borrowing capacity against the latest OPR of 2.75% before locking in an offer.
Review the transactions database on Rummah to confirm street-level comparables - the 1.7% MHPI move masks wide divergence between mukims.
For Penang-specific shortlisting, browse Penang property for sale with terrace and Seberang Perai filters applied.

What to watch next

The 2Q2026 NAPIC release is due in mid-August and will be the first quarter to capture the full impact of Budget 2026's Housing Credit Guarantee Scheme top-up to RM20 billion. If new launch sales rates lift above the 11.5% recorded in 1Q2026, the overhang line should stabilise; if they do not, expect louder calls from REHDA for further demand-side measures, and a renewed policy debate around the affordability ceiling. Buyers and sellers alike should treat the 2Q figure as the cleaner signal - 1Q2026 sits too close to the Chinese New Year effect to be a clean baseline on its own.