How Does Inflation Affect Housing Prices?

On the May 11th, 2022, Bank Negara Malaysia made a surprise decision to increase its overnight policy rate (OPR) by 25 basis points to 2% from 1.75%. This decision came as a result of rising inflation pressures—in fact, the consumer price index had increased 2.2% year-on-year earlier this year in March.


We are currently in an inflationary environment that’s at a multi-year, multi-decade high due to supply chain bottlenecks and years of negative to low-interest rates. Inevitably, building materials such as steel and cement are also increasing in price—this, in turn, affects the prices of houses.


Another reason contributing to the rising inflation is the global supply chain issues. The COVID-19 pandemic has disrupted people’s lives, inevitably leading to a decline in the workforce. With lockdowns and debilitating illness businesses, we’re continuing to see the effects of the disruption until today.


Will houses be more expensive now?


The short answer is yes. Due to the inflated costs of raw building materials and shipment, house prices won’t be seeing a decrease anytime soon.

Should I still purchase a house?


Houses are still an excellent asset during inflation. The value of your house rises with the inflation rate, which means that you’re protected even if the inflation continues going up. With the right knowledge, you can invest in strategically located properties that can see a price growth due to their desirability, leading to better return on investment (ROI) if you were to sell your house in the future.

Great, where do I start?


The first step is determining your budget, the type of home you prefer, and the location. Do you want a landed property in a more peaceful part of town that’s low density? Is a high-rise with the perfect view of the city skyline more up your alley? Factoring these into your decision will help you find the ideal home that you can not only live in but be a good investment against inflation.


Whatever your ideal type of home, Mah Sing will have the right property for you. Check out our website and be in the know of our existing properties and all the exciting upcoming launches.