Which is higher? Rising inflation or property prices? What’s the latest number?

Which is higher? Rising inflation or property prices? What’s the latest number?

Property is often called a hedge against inflation.

But how true is this?

I wrote about this in July 2024. Original article here.

At that time, I asked a simple question:

Which rose faster, inflation or the house price?

Well, it is time to update the numbers.

And interestingly, the latest numbers tell us something quite different depending on whether we look at the long term or just the latest year.

Let’s look at it.

WHAT HAS HAPPENED TO HOUSE PRICES?

According to the latest Malaysian House Price Index from NAPIC, the national house price index reached 234.7 points in Q2 2026, based on 2010 = 100.

The average Malaysian house price was RM506,317. This is an average for all property types. Certain types rose faster (terrace) while some did not rise as fast (semi-detached) and high-rise rose faster than semi-detached.

Compare that with 2010.

The average house price was RM217,857.

That’s a pretty big increase.

From RM217,857 to RM506,317.

That’s an increase of about 132%.

In other words, the average house price has more than doubled since 2010.

But what happened to inflation during the same period?

WHAT ABOUT INFLATION?

Malaysia’s Consumer Price Index also uses 2010 as its base year.

The latest CPI index was 137.1 in August 2026.

That means consumer prices are roughly 37% higher than the 2010 base.

So let’s make this very simple.

Since 2010:

	2010	Latest	Increase
Malaysia House Price Index	100	234.7	+134.7%
Consumer Price Index	100	137.1	+37.1%

So, over this period, house prices rose much faster than general consumer prices.

This is probably why people say:

“Property is a hedge against inflation.”

There is some evidence for that statement.

But wait.

There is another side to the story.

BUT WHAT IS HAPPENING NOW?

This is where it gets interesting.

Malaysia’s inflation was 1.9% in August 2026.

Meanwhile, the national house price index increased only 0.9% year-on-year in Q2 2026.

So if we only look at the latest numbers:

Inflation: +1.9%

House prices: +0.9%

Suddenly, inflation is rising faster. Moving ahead versus property prices.

Haha.

So perhaps we should be careful when we say:

“Property always beats inflation.”

No.

It doesn’t necessarily do so every year.

Property prices can go up strongly.

They can also go up slowly.

They can stay flat.

And some properties can even fall.

WHY DOES PROPERTY STILL HAVE A LONG-TERM ADVANTAGE?

A house is not just another consumer product.

When we buy a house, we are buying a physical asset.

Land.

Location.

Building.

And, importantly, we are buying something which cannot simply be manufactured in unlimited quantities in exactly the same location.

Think about land in central Kuala Lumpur.

Or a landed house in an established neighbourhood.

Or a property near a major office area.

There is only so much land available unless the expansion continues to move outwards from the City Centre.

At the same time, construction costs, labour costs, materials and land costs can increase over time.

This doesn’t mean every property will become more valuable.

But it helps explain why property prices can rise over long periods.

NAPIC’s latest figures also show that the national average house price increased from RM444,230 in Q1 2022 to RM506,317 in Q2 2026.

But even within Malaysia, the story is very different depending on location.

In Q2 2026, the average house price was:

Kuala Lumpur – RM825,282

Selangor – RM561,187

Penang – RM503,388

Johor – RM489,881

These are very different markets.

And this is why I keep saying:

Don’t simply buy “property”.

Buy the right property.

SO, SHOULD WE BUY PROPERTY BECAUSE OF INFLATION?

Not so fast.

If your only reason for buying a property is:

“Inflation is going up, so property must go up.”

I would say that’s not enough.

A property still needs to make sense.

Who will rent it? What is the rental like?

Who will buy it from you later?

What is the loan repayment? Could we afford it easily or through our nose?

And most importantly:

How much are you paying today?

A RM500,000 property that becomes RM550,000 after several years sounds good.

But if you spent a lot on interest, maintenance, renovation, taxes and other costs, the actual return may be very different.

And if the property sits empty?

That’s another story.

WHAT ABOUT OUR SALARY?

This is perhaps the part I find most important.

Suppose inflation rises 2% a year.

But your salary rises 5% a year.

Your purchasing power may still improve.

But if your salary rises only 1% while everything else rises 2%, life gets harder.

So when we talk about property affordability, we shouldn’t only ask:

“How much has property increased?”

We should also ask:

“How fast has my income increased?”

Because if our income is rising faster than property prices, perhaps we can still afford to buy later.

If property prices are rising much faster than our income, affordability becomes a much bigger problem.

This is why property investment is not simply about inflation.

It is about income, affordability, financing, location, demand and supply too.

SO, WHICH ROSE FASTER?

If we look at the long term since 2010, the answer is clearly house prices.

House prices increased by roughly 134.7% on the index, compared with about 37.1% for consumer prices.

But if we look at the latest year, the answer is different.

Inflation is currently running at 1.9%, while Malaysian house prices rose 0.9% year-on-year in Q2 2026.

And that’s actually the lesson.

Property can be a long-term hedge against inflation.

But it is not a guarantee that property prices will beat inflation every single year.

So if you’re thinking about buying property, don’t buy simply because someone tells you:

“Property always goes up.”

Instead, ask:

Can I hold it long enough for the investment thesis to work?

There is no need to rush.

Inflation will continue to change.

Property prices will continue to change.

Our salaries will change too.

The smart thing is to understand the numbers and make our own decision.

Buy property because the property makes sense.

Not simply because inflation is rising.

Happy deciding!

Stay updated at all time for free. Sign up for daily investment news updates (FREE since Nov 2013 and FOREVER). 

Please LIKE kopiandproperty.com FB page to get daily updates about the property market beyond kopiandproperty.com articles.

Sources

• Original article: Which rose faster, inflation or the house price? – kopiandproperty.com
• NAPIC – Malaysian House Price Index Q1–Q2 2026P
• NAPIC – Malaysian House Price Index 2025
• DOSM – Consumer Price Index, August 2026
• DOSM – Analysis of Annual Consumer Price Index, Malaysia 2025