Determinants of Housing Prices in Malaysia

Chan, Wei Ern (2020) Determinants of Housing Prices in Malaysia. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

As we know in Malaysia, the housing prices has been increasing year by year. Therefore, this study would like to investigate whether the selected macroeconomic variables have significant relationship with the housing prices in Malaysia. The macroeconomic variables chosen are Base Lending Rate (BLR), inflation rate (CPI), real Gross Domestic Product (RGDP), and population growth (POP) of Malaysia. The method used to analyse the collect data is known as Autoregressive Distributed Lag (ARDL) model. This study collected and studied the data based on annual data over the period from 1989 to 2018, with 30 observations. After implementing the ARDL tests on the variables, this study performs diagnostic checking on the model and passed all of the five tests. The results concluded that all macroeconomic variables have short run relationship with housing prices. While for long run, all macroeconomic variables have long run relationship with housing prices except for inflation rate where it is found to be not significant. Besides, there are policies implementations suggested in this study. Lastly, this study had also stated the limitations and recommendations for future researchers. The findings benefit various parties such as investors, policy makers, house developers and home buyers.