By Joseph Wong

The real estate market sentiment often swings on the pivot of short-term news such as a minor adjustment in the Overnight Policy Rate (OPR), a new government cooling measure or a quarterly dip in transaction volumes. However, smart money and long-term developers look at a far more inexorable force, namely, the demographic tide. 

To be more exact, whether Malaysia is currently entering an urban squeeze that will redefine the property landscape over the next five years. The nation’s population is on track to expand by 2.2 million people by 2030. This expected population growth will have an impact on property demand and ensure that the real estate sector remains one of the most resilient pillars of the Malaysian economy.

The government projects that the national population will jump from 34.3 million today to 36.5 million by 2030. While 2.2 million new residents may sound like a manageable figure on a national scale, the housing implications are staggering, noted Juwai IQI co-founder and group chief executive officer Kashif Ansari.

Using the Department of Statistics Malaysia (DOSM) average of 3.8 people per household, this population surge translates to approximately 582,000 new households entering the market. To put that in perspective, Malaysia needs to produce an average of more than 116,000 new homes every single year just to keep pace with basic population growth. This calculation excludes the existing backlog of demand, replacement of ageing stock and the growing appetite for upgraded homes from the existing population.

“This population growth is an under-appreciated force adding new buyers and renters to the housing market, year after year. It’s why we believe the number of homes bought and rented will climb all over Malaysia during the next half decade,” explained Ansari. 

The demand drivers

While every state will see growth, the IQI report highlights a significant concentration of demand. Just ten states will account for 90% of Malaysia’s population growth through 2030.

Selangor remains the engine of national housing demand. Between 2025 and 2030, the state will add 382,000 residents. To visualise this, it is roughly equivalent to adding a city half the size of Ipoh to Selangor’s borders in just five years.

With an urbanisation rate of 98.5%, virtually every one of these new residents will be a city dweller. This necessitates a radical shift in development strategy. The market in Selangor no longer just needs houses; it needs high-density Transit-Oriented Developments (TODs), centrally located affordable housing and mid-market residential projects that cater to a sophisticated, mobile urban workforce.

Perhaps the most striking finding in the data is the surge in Sabah. By 2030, Sabah’s population is forecast to grow by 283,000 residents, second only to Selangor and surpassing even Johor in absolute growth.

Sabah’s current urbanisation rate stands at 55.6%, meaning there is a massive internal migration still underway from rural to urban centres. For developers and investors, Sabah offers a rare double-alpha opportunity, meaning high raw population growth coupled with a rapidly accelerating urbanisation trend.

Johor follows closely with a forecast gain of 279,000 residents. However, IQI believes these official projections might actually be conservative. With the Johor-Singapore Special Economic Zone (JS-SEZ) and the RTS Link coming online, Johor is becoming a magnet for both ambitious Malaysians moving for work and lifestyle-seeking Singaporeans looking across the border.

The supply-demand gap

Among the most striking findings is the pace of growth on the East Coast. Kelantan is projected to add 235,000 residents, a growth rate of over 12.3%. This is the fastest in the country outside of Putrajaya. Neighbouring Terengganu is close behind with a 12.2% growth rate.

Historically, these markets have seen lower rates of large-scale residential development. As the East Coast Rail Link (ECRL) connects Pahang and Kelantan more effectively to the Klang Valley, the demand for modern, mid-market housing in these states will likely reach a fever pitch. The infrastructure is catching up to the people and where infrastructure meets a growing population, real estate value inevitably follows.

The shift to cities

Population growth is only half of the story. The other factor is urbanisation, namely, the process of people moving from rural areas to cities in search of better services, infrastructure and jobs.

In 2020, about 75.1% of Malaysians lived in urban areas. By 2030, that figure is expected to hit 79.3%. This shift involves about 4.5 million more Malaysians living in urban centres than just a decade prior.

When people move to the city, they don’t just need a roof over their heads. They need a specific kind of roof. They need proximity to transport, retail hubs and healthcare. This is why urbanisation is considered a primary driver of economic growth. Even in states with lower urbanisation rates like Pahang (54.2%) and Kelantan (45.1%), the shift toward the city is steady and relentless, creating a year-on-year increase in the need for urban housing.

The bottom line

To quantify the impact, Ansari provided a compelling forecast for the next five years. Based on current trends, IQI estimates that 30% to 40% of these 582,000 new households will purchase a home.

This means population growth alone could add between 35,000 and 46,000 property transactions per year. Given that there were approximately 257,000 residential transactions in 2025, this demographic surge alone represents a 15% increase in the number of homes purchased.

“Malaysia’s property market is driven by people,” Ansari said. “The data tell us that more people are coming, more of them are moving to cities and the government is building the infrastructure to support both trends. That is the basis for our expectations that residential demand will continue to grow over the  next five years.”

This article was first published in StarBiz 7.