Written by Muhazrol Muhamad, GVP, Head of Bumiputra Segment 

While market discussions often focus on foreign buyers or the gig economy, data points to a far larger and more stable demand base: Malaysia’s 1.3 million civil servants. 

From December 2024, civil servants received a salary increase of over 13 percent, the largest in public service history. This has significantly boosted purchasing power and housing loan eligibility. Despite this, only about 774,000 civil servants currently have active loans under the Public Sector Home Financing Board (LPPSA), leaving more than 500,000 potential buyers still inactive. 

If just 10 percent of this group enters the market in 2026 with an average purchase of RM350,000, it would inject over RM17 billion into the property market, enough to meaningfully reduce residential overhang in key states. 

The salary hike also expands financing capacity. An officer previously earning RM3,500 could typically qualify for around RM380,000 in financing. After the increase, income of roughly RM4,000 raises eligibility to over RM430,000, shifting buyers from apartments into landed terraced homes, which remain the preferred segment. 

For existing homeowners, the Second LPPSA Financing offers a further advantage. Civil servants enjoy a fixed 4.0 percent interest rate for both first and second loans, providing stability at a time when private-sector borrowers face floating rates. 

Heading into 2026, civil servants are positioned to be one of the most important drivers of housing demand, supported by higher incomes, fixed-rate financing, and a large pool of buyers yet to enter the market.