Rental demand remained on the uptick during the second quarter of 2022, registering a 12.89% increase quarter-on-quarter (QoQ) and a year-on-year (YoY) rise of 96.83%, Property Guru Malaysia revealed in its Malaysia Property Market Report Q3 2022 today.

The rental price index meanwhile saw an increase of 2.82% QoQ and 4.46% YoY in Q2 2022, a development which the property portal said would lead to growth in the supply of rental properties as landlords leverage the rising demand trend.

Given the rising inflation rate of 3.4% as of June and the increase in overnight policy rate to 2.25% earlier this year, it said, potential homebuyers might continue to exercise caution in making large purchasing decisions.

"With the ongoing inflation and worries of rising purchasing costs taking effect, potential homebuyers will gravitate towards rental as a short-term alternative, and the rental market will likely continue to expand to the year's second half," it said.

The report also registered upward trends in several areas such as the property sale market index, demand index and supply index, across both landed and high-rise sectors.

The overall demand index, which was in negative territory in the previous quarter, moved upwards by 7.93% QoQ.

According to the report, landed properties outperformed high-rise properties, with the landed sale price index moving upwards by 1.32% QoQ and 5% YoY in Q2 2022.

It said there was also an uptick of 1.91% QoQ and 7.31% YoY in supply, indicating a slight increase in confidence for both buyers and sellers.

This is consistent with the latest market report published by the Valuation and Property Services Department in April, stating that the overall volume of property transactions increased by a marginal 1.5%.

Property Guru also said that the reopening of borders had restored the prospect of the market's expansion, to appeal to foreign buyers.

"As expected, the property market in the second quarter of the year saw a gradual trend of improvements, although it may not be fully out of the woods yet," Property Guru country manager Sheldon Fernandez said.

Adding that ongoing factors such as the rising inflation, increase in OPR and affordability issues would weigh in on market conditions, he said it would take some time before consumers are confident in making large property decisions.

"The full impact of these factors will most likely be seen in the current quarter's performance," he said.