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Constructing an enhanced house price index model in Malaysia: empirical evidence

The objective of this study is to construct an enhanced house price index model in Malaysia. Having reviewed the current model of the Malaysian House Price Index (MHPI), it is currently found that this index is constructed based on the demand-driven variables. Previous studies explained that both ma...

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Main Authors: Nik Nor Amalina Nik Mohd Sukrri,, Norazlina Abd. Wahab,, Rosylin Mohd. Yusof,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2019
Online Access:http://journalarticle.ukm.my/14142/1/jeko_53%283%29-9.pdf
http://journalarticle.ukm.my/14142/
http://www.ukm.my/fep/jem/content/2019-3.html
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spelling my-ukm.journal.141422020-02-07T10:55:57Z http://journalarticle.ukm.my/14142/ Constructing an enhanced house price index model in Malaysia: empirical evidence Nik Nor Amalina Nik Mohd Sukrri, Norazlina Abd. Wahab, Rosylin Mohd. Yusof, The objective of this study is to construct an enhanced house price index model in Malaysia. Having reviewed the current model of the Malaysian House Price Index (MHPI), it is currently found that this index is constructed based on the demand-driven variables. Previous studies explained that both macroeconomic factors (income levels, interest rates, and labor market) and supply factors are included in the construction of the house price index. This study begins by examining the determinants of the existing house price index in Malaysia. This study employs the Autoregressive Distributed Lag Model (ARDL) to discover the short and long-run dynamics between the variables. The study considers the quarterly data from the first quarter of 2008 to the fourth quarter of 2017. The findings reveal that construction cost (CC) and housing loan (HLN) are significant in determining HPI while Overnight Policy Rate (OPR) and land supply (LS) are insignificant with HPI. Then, the housing loan was found to be the most significant variable in determining HPI in Malaysia. Hence, we propose a new enhanced house price index that incorporates new demand and supply variables, by using the Laspeyres approach to calculate the new enhanced HPI. The analysis shows that the enhanced house price index has also recorded the same trend but with a lower value of prices as compared to the current MHPI. This enhanced HPI model may reflect the real situation of the housing market in Malaysia and it is expected to increase the affordability of the society in fulfilling their basic needs. This study may provide evidence for the involved parties to have some policy ramifications to further monitor and take appropriate measures to control the prices of property. Penerbit Universiti Kebangsaan Malaysia 2019 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/14142/1/jeko_53%283%29-9.pdf Nik Nor Amalina Nik Mohd Sukrri, and Norazlina Abd. Wahab, and Rosylin Mohd. Yusof, (2019) Constructing an enhanced house price index model in Malaysia: empirical evidence. Jurnal Ekonomi Malaysia, 53 (3). pp. 1-14. ISSN 0127-1962 http://www.ukm.my/fep/jem/content/2019-3.html
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description The objective of this study is to construct an enhanced house price index model in Malaysia. Having reviewed the current model of the Malaysian House Price Index (MHPI), it is currently found that this index is constructed based on the demand-driven variables. Previous studies explained that both macroeconomic factors (income levels, interest rates, and labor market) and supply factors are included in the construction of the house price index. This study begins by examining the determinants of the existing house price index in Malaysia. This study employs the Autoregressive Distributed Lag Model (ARDL) to discover the short and long-run dynamics between the variables. The study considers the quarterly data from the first quarter of 2008 to the fourth quarter of 2017. The findings reveal that construction cost (CC) and housing loan (HLN) are significant in determining HPI while Overnight Policy Rate (OPR) and land supply (LS) are insignificant with HPI. Then, the housing loan was found to be the most significant variable in determining HPI in Malaysia. Hence, we propose a new enhanced house price index that incorporates new demand and supply variables, by using the Laspeyres approach to calculate the new enhanced HPI. The analysis shows that the enhanced house price index has also recorded the same trend but with a lower value of prices as compared to the current MHPI. This enhanced HPI model may reflect the real situation of the housing market in Malaysia and it is expected to increase the affordability of the society in fulfilling their basic needs. This study may provide evidence for the involved parties to have some policy ramifications to further monitor and take appropriate measures to control the prices of property.
format Article
author Nik Nor Amalina Nik Mohd Sukrri,
Norazlina Abd. Wahab,
Rosylin Mohd. Yusof,
spellingShingle Nik Nor Amalina Nik Mohd Sukrri,
Norazlina Abd. Wahab,
Rosylin Mohd. Yusof,
Constructing an enhanced house price index model in Malaysia: empirical evidence
author_facet Nik Nor Amalina Nik Mohd Sukrri,
Norazlina Abd. Wahab,
Rosylin Mohd. Yusof,
author_sort Nik Nor Amalina Nik Mohd Sukrri,
title Constructing an enhanced house price index model in Malaysia: empirical evidence
title_short Constructing an enhanced house price index model in Malaysia: empirical evidence
title_full Constructing an enhanced house price index model in Malaysia: empirical evidence
title_fullStr Constructing an enhanced house price index model in Malaysia: empirical evidence
title_full_unstemmed Constructing an enhanced house price index model in Malaysia: empirical evidence
title_sort constructing an enhanced house price index model in malaysia: empirical evidence
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2019
url http://journalarticle.ukm.my/14142/1/jeko_53%283%29-9.pdf
http://journalarticle.ukm.my/14142/
http://www.ukm.my/fep/jem/content/2019-3.html
_version_ 1662755928134385664
score 13.211869

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