The effect of macroeconomic factors, ageing population and government housing policies on residential housing prices in Malaysia

• Main Author: Paul Anthony, Maria Das
• Format: Thesis
• Language: English; English
• Published: 2020
• Subjects: HB Economic Theory
• Online Access: https://etd.uum.edu.my/10445/1/depositpermission_901035.pdf; https://etd.uum.edu.my/10445/2/s901035_01.pdf; https://etd.uum.edu.my/10445/
• Institution: Universiti Utara Malaysia

This study explored the impact of macroeconomic factors, ageing population and government housing policies on house prices in Malaysia. Quantitative research methods and time-series econometric analyses (i.e. Augmented Dickey-Fuller (ADF) and Autoregressive Distributed Lags (ARDL) Long Run Estimation) were employed to meet the study objectives. The results of the study without the government housing policies showed that consumer price index (CPI) is positively associated will all segments of house prices (aggregate, terraced, detached, semi-detached, and high-rise). Similar results were obtained for population except for semi-detached house prices; money supply except for semi-detached and detached house prices; and ageing population except for terraced house prices. However, Gross Domestic Product (GDP) was found to be insignificant with all segments of house prices in the long run relationship. Conversely, the results of the study with the government housing policies revealed that there is a positive association between GDP and CPI with aggregate, detached and high-rise house prices; population with aggregate, terraced and detached house prices; money supply with aggregate and terraced house prices; ageing population with all segments except for high-rise house prices; government’s MM2H housing policy with aggregate and high-rise house prices; and another government’s housing policy (PRIMA) with aggregate, terraced and high-rise house prices. However, the interest rates were found to be negatively related only with aggregate and detached house prices. Furthermore, the study found that the semi-detached segment has the highest rate of adjustment towards an equilibrium compared to other house segments without government housing policy whilst the detached segment, with such policy. The study concluded that convergence to equilibrium is faster in the model with government housing policies despite the existence of the long run relationship between house prices and its factors. Nonetheless, the magnitude of the adjustment is too slow for both models.