KUALA LUMPUR, Jan. 3 (Xinhua) -- Malaysia's property market may only have a meaningful recovery in 2020, given weak sentiment on oversupply and potential rate hikes, said a Malaysian analyst Wednesday.

Based on historical cycles, RHB Research Institute's analyst Loong Kok Wen said the country's property market may only have a convincing recovery in 2020 or 2021, with some mini cycles in between.

"Historically, a new property cycle typically starts every 10 years, supported by population growth and economic cycles. Therefore, in the coming two years, we expect the property market to continue with the consolidation phase," she highlighted in her sector report.

Sentiment towards Malaysian property market turned bearish at the end of 2017, due to recent negative news flow on unsold units, approval freeze on selected commercial developments, and expectation of interest rate hikes in 2018.

"We think the amount of unsold properties may continue to climb as more projects are completed in 2017 or 2018, and the overhang concern may persist for another one to two years," said Loong.

Based on her data compilation, the number of unsold or overhang units has gone back to the pre-quantitative easing levels in 2008 to 2010.

Although the overhang of property units is likely to persist over the next two years, she believed the situation should be under control as many developers have scaled back launches over the last few years, given the weak market conditions.

According to the report, incoming supply of residential units in the first half of 2017 had fallen by 3.4 percent from the first half of 2016. Meanwhile, the market expects Malaysian central bank to raise interest rates in the first half of 2018, which could be another dampener to the property sector.

"We are expecting a 25 basis points hike, thus, the impact on demand for property should be manageable. However, buyers' sentiment, which is already weak, will likely turn more bearish," Loong said.

Loong also expects property sales growth to remain flat this year after registering a low single digit growth in 2017, as affordability concern remains due to the slightly weaker economic growth expected in 2018.

Gross domestic product growth is estimated to slow down to 5.2 percent in 2018, after posting an estimated 5.6 percent in 2017, according to the report. Loong also noted potential buyers may continue to hold back purchases, due to the upcoming general election and in anticipation of some property price correction.