It looks terrific for terraced houses

Terraced houses are expected to be a top-performing property segment in Malaysia’s residential real estate market in 2025, with industry experts projecting significant growth.

Given current projections, terraced houses could see prices rise by up to 5% by the end of 2025, higher than other landed residential properties, according to chartered valuation surveyor Irhamy Ahmad, who is also the founder and chief executive officer of Irhamy Valuers International, a part of real estate agency Juwai IQI.

“We expect up to 5% price growth in terraced houses by December 2025,” said Ahmad. “That would mean terraced houses outperform other property types next year, just as they did in 2023. Terrace housing is widespread across Malaysia, especially in Kuala Lumpur and the Klang Valley suburbs, making it a core component of the nation’s housing stock.”

The anticipated 5% growth in terraced house prices represents a notable improvement over the past year. In the 12 months leading up to the second quarter of 2024, the National Property Information Centre (Napic) reported only a 1.1% increase in terraced house prices.

However, overall, 2023 saw a rise of 3.7% in terraced house values, marking it as one of the strongest performing residential segments of the year.

Terraced houses also outpaced other property types in 2023, with high-rise units following closely at a 3.6% price growth, semi-detached homes at 2.3% and detached houses trailing at just 1.4%.

Ahmad explained that, over the long term, terraced houses have consistently outperformed other residential categories. Since 2010, terraced house prices have surged by 144.4%, significantly exceeding the overall house price index, which grew by 118.7% during the same period.

This upward trend has positioned terraced houses as a reliable investment, with an average current market price of RM453,343. Despite their remarkable growth record, they remain more affordable than semi- detached and detached houses, which average RM718,599 and RM643,387, respectively.

High-rise properties, typically the least expensive, currently have an average price of RM367,201.

Corner units: A premium choiceWithin the terraced housing category, corner units hold special appeal due to their larger lot sizes and unique layouts. These homes typically come with extra land, surpassing the standard 22ft x 75ft (1,650 sq ft) dimensions of a typical terraced house.

Many corner lots measure between 3,000 and 3,500 sq ft, offering homeowners more outdoor space and flexibility for renovations.

“Double-story corner terraced houses are particularly prized in the market,” said Ahmad.

“They provide ample renovation opportunities and more space, with only one immediate neighbour. This design element appeals to buyers seeking a bit more privacy and room for lifestyle adjustments.”

The desirability of corner units positions them in a price range between standard terraced houses and semi-detached houses.

In popular areas like Taman Tun Dr Ismail and Bandar Utama, corner terraced properties often command premium prices, with some homeowners investing further by adding a third floor to the typical two-storey structure, expanding the built-up area beyond 4,000 sq ft.

Economic factors supporting its growthThe promising forecast for terraced houses in 2025 is grounded not only in buyer demand but also in Malaysia’s broader economic conditions.

“Our forecast for up to 5% growth in terraced house prices in 2025 reflects the steady demand for this type of home and favourable economic projections,” Ahmad explained.

Malaysia’s economy is expected to grow by around 5% in 2025, buoyed by strong performance across manufacturing, trade, commodities and construction. This growth, combined with Bank Negara’s decision to maintain a neutral policy rate at 3%, creates a conducive environment for real estate.

The 3% rate is expected to support stable borrowing costs without increasing inflation, which is projected to remain manageable at 2% to 3%.

Steady economic growth and stable interest rates typically translate into favourable conditions for both homebuyers and renters. For 2025, two primary trends are likely to influence the residential property market: The rise of mixed-use developments and the government’s focus on affordable housing.

Trends shaping the marketThe demand for mixed-use developments is on the rise, particularly among buyers seeking convenience and a cohesive lifestyle. These developments combine residential, commercial and recreational spaces in one location, appealing to homeowners looking for ease and integrated living.

This trend is expected to contribute to the popularity of terraced houses, which are often situated in planned, amenity-rich townships that embody the principles of mixed-use development.

Meanwhile, the government’s commitment to affordable housing will further shape the market. New construction initiatives focused on homes priced below RM300,000 aim to make housing more accessible to a broader segment of the population.

Although terraced houses typically fall outside this price bracket, the overall growth in residential supply and affordability initiatives will likely enhance demand for various housing types, including terraced homes.

In this context, terraced houses are well-positioned to benefit from these developments. Their affordability and appeal within integrated townships make them a top choice for families and first-time buyers, especially in a stable economic environment

A promising year aheadOverall, 2025 is shaping up to be a positive year for Malaysia’s residential real estate market, with terraced houses likely to see substantial growth. The stable economic environment, low borrowing costs and growing demand for community-oriented developments are factors that collectively support this segment’s growth potential.

Terraced houses have shown resilience and growth across economic cycles and 2025 appears set to continue this trend. With projections indicating a price increase of up to 5%, they are expected to outperform other housing types, making them a solid investment choice.

Whether for their relatively affordable price point, the lifestyle flexibility they offer, or their proven track record of growth, terraced houses remain a popular and promising option for homeowners and investors alike.