The sources of house price changes in Malaysia
Purpose: The purpose of this paper is to examine the house market in Malaysia from 2002 to 2015. Specifically, the macroeconomic determinants on the house price and house demand are investigated. Design/methodology/approach: Structural Vector Autoregressive Regression was adopted to estimate the une...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Emerald
2018
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| Online Access: | http://psasir.upm.edu.my/id/eprint/74276/1/The%20sources%20of%20house%20price%20changes%20in%20Malaysia.pdf |
| _version_ | 1796979702405005312 |
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| author | Kok, Shiau Hui Ismail, Normaz Wana Lee, Chin |
| author_facet | Kok, Shiau Hui Ismail, Normaz Wana Lee, Chin |
| author_sort | Kok, Shiau Hui |
| collection | UPM |
| description | Purpose: The purpose of this paper is to examine the house market in Malaysia from 2002 to 2015. Specifically, the macroeconomic determinants on the house price and house demand are investigated. Design/methodology/approach: Structural Vector Autoregressive Regression was adopted to estimate the unexpected changes in both house demand (residential transaction volume) and prices based on economic theoretical reasoning that consider shock from macroeconomic determinants. Findings:
The transaction volume and real house prices respond to most of the macroeconomic shocks. While the impact of real gross domestic product (GDP) on house prices appears to be stronger and longer in comparison to other macroeconomic shocks, a 60 per cent change in house prices can be explained by real GDP regardless of whether it is in the short run or the long run. The studies also reveal that a positive effective exchange rate plays an important role when demonstrating the transaction volume. Moreover, monetary liquidity plays a major role in justifying the transaction volume. This implies that mortgage lending may have an impact on housing demand. Meanwhile, movements of house prices cannot be explained by the demand in quantity. This signifies that supply has a strong influence in determining the price.
Research limitations/implications: This study has implications on policymakers of which the interest rate as a cooling measure might not be effective in the short run. The interest rate has very little impact on housing prices. Furthermore, policymakers should address the concerns on speculations, as the results reveal that monetary liquidity and the exchange rate have a strong impact on the housing demand.Originality/value: This study seeks to provide answers regarding the recent upsurge of Malaysian housing prices. Besides focusing on the house price changes, this study addresses the role of transaction volume while evaluating the house market, as housing prices are usually downwards rigid. Since the price and transaction volume are both related to the transaction activity, this study is significant and could be a good reflection on the actual demand behaviour in the residential market. |
| first_indexed | 2024-03-06T10:12:47Z |
| format | Article |
| id | upm.eprints-74276 |
| institution | Universiti Putra Malaysia |
| language | English |
| last_indexed | 2024-03-06T10:12:47Z |
| publishDate | 2018 |
| publisher | Emerald |
| record_format | dspace |
| spelling | upm.eprints-742762020-04-02T07:44:37Z http://psasir.upm.edu.my/id/eprint/74276/ The sources of house price changes in Malaysia Kok, Shiau Hui Ismail, Normaz Wana Lee, Chin Purpose: The purpose of this paper is to examine the house market in Malaysia from 2002 to 2015. Specifically, the macroeconomic determinants on the house price and house demand are investigated. Design/methodology/approach: Structural Vector Autoregressive Regression was adopted to estimate the unexpected changes in both house demand (residential transaction volume) and prices based on economic theoretical reasoning that consider shock from macroeconomic determinants. Findings: The transaction volume and real house prices respond to most of the macroeconomic shocks. While the impact of real gross domestic product (GDP) on house prices appears to be stronger and longer in comparison to other macroeconomic shocks, a 60 per cent change in house prices can be explained by real GDP regardless of whether it is in the short run or the long run. The studies also reveal that a positive effective exchange rate plays an important role when demonstrating the transaction volume. Moreover, monetary liquidity plays a major role in justifying the transaction volume. This implies that mortgage lending may have an impact on housing demand. Meanwhile, movements of house prices cannot be explained by the demand in quantity. This signifies that supply has a strong influence in determining the price. Research limitations/implications: This study has implications on policymakers of which the interest rate as a cooling measure might not be effective in the short run. The interest rate has very little impact on housing prices. Furthermore, policymakers should address the concerns on speculations, as the results reveal that monetary liquidity and the exchange rate have a strong impact on the housing demand.Originality/value: This study seeks to provide answers regarding the recent upsurge of Malaysian housing prices. Besides focusing on the house price changes, this study addresses the role of transaction volume while evaluating the house market, as housing prices are usually downwards rigid. Since the price and transaction volume are both related to the transaction activity, this study is significant and could be a good reflection on the actual demand behaviour in the residential market. Emerald 2018 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/74276/1/The%20sources%20of%20house%20price%20changes%20in%20Malaysia.pdf Kok, Shiau Hui and Ismail, Normaz Wana and Lee, Chin (2018) The sources of house price changes in Malaysia. International Journal of Housing Markets and Analysis, 11 (2). 335 - 355. ISSN 1753-8270 10.1108/IJHMA-04-2017-0039 |
| spellingShingle | Kok, Shiau Hui Ismail, Normaz Wana Lee, Chin The sources of house price changes in Malaysia |
| title | The sources of house price changes in Malaysia |
| title_full | The sources of house price changes in Malaysia |
| title_fullStr | The sources of house price changes in Malaysia |
| title_full_unstemmed | The sources of house price changes in Malaysia |
| title_short | The sources of house price changes in Malaysia |
| title_sort | sources of house price changes in malaysia |
| url | http://psasir.upm.edu.my/id/eprint/74276/1/The%20sources%20of%20house%20price%20changes%20in%20Malaysia.pdf |
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