The number of Malaysian residential properties that were sold in the first three quarters of 2014 increased by three percent to about 175,000 units while aggregate value rose by 19 percent to over RM60 billion on a year-on-year basis, according to a report from RAM ratings.

Specifically, the number of houses sold in Selangor during the said period dipped by 2 percent to 45,000 units, while Kuala Lumpur suffered a larger drop of 5 percent to reach about 11,000 units But versus the 2012 peak, transaction numbers in the state plummeted by 21 percent, while that in Kuala Lumpur dived by 44 percent.

Nevertheless, the total value of transactions in Selangor rose by 6 percent to about RM20 billion, while that in Kuala Lumpur climbed by 14 percent to nearly RM9 billion.

In contrast, the number of residential properties sold in Penang increased by 4 percent to more than 26,000 units, while aggregate transaction value surged by 13 percent to 9 billion ringgit during the first three quarters of 2014.

Likewise, Johor saw a 13 percent uptick in the volume of transactions to about 27,000 units, while total transaction value swelled by 36 percent to around RM9 billion.

Additionally, the total value of housing loan applications dipped to about RM165 billion in 9M 2014 from around RM170 billion in the same period in 2013. But only RM90 billion were approved, up 2 percent from the corresponding period in 2013 but the slowest pace since 2012.

Looking ahead, home buyers are expected to turn cautious due to possible price increases amid the upcoming Goods and Services Tax (GST) and more economic uncertainties this year. Transaction activity is also unlikely to surge prior to GST's implementation, and lenders will continue to impose tight lending criteria.

The prices of residential properties are also expected to be kept in check by soft buying sentiments and stiff competition. But the biggest question is whether Johor can sustain the sale of houses.

On a positive note, demand for affordable home is forecasted to remain strong this year. Cost of financing will likely remain conducive despite a possible 25-bps hike in the overnight policy rate (OPR) and the move to a new benchmark regime. Furthermore, more foreigners may enter the local housing market to take advantage of the weaker ringgit.