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Macroeconomic and Demographic Determinants of Residential Property Prices in Malaysia

This paper studies the relationship between residential property prices and macroeconom- ic and demographic determinants in Malaysia. In the years following the Asian nancial crisis, property prices in Malaysia rose substantially, resulting in an affordability crisis and ultimately policy responses...

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Main Authors:	Trofimov, Ivan D., Nazaria, Md. Aris, Xuan, Dickson C.D.
Format:	Article
Language:	English
Published:	Faculty of Economics and Business, University of Zagreb and De Gruyter Open 2018
Subjects:	H Social Sciences (General) HA Statistics HB Economic Theory HF Commerce HG Finance
Online Access:	http://ir.unimas.my/id/eprint/33189/1/Ivan.pdf http://ir.unimas.my/id/eprint/33189/ https://content.sciendo.com/configurable/contentpage/journals$002fzireb$002f21$002f2$002farticle-p71.xml
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id	my.unimas.ir.33189
record_format	eprints
spelling	my.unimas.ir.331892021-05-29T13:09:05Z http://ir.unimas.my/id/eprint/33189/ Macroeconomic and Demographic Determinants of Residential Property Prices in Malaysia Trofimov, Ivan D. Nazaria, Md. Aris Xuan, Dickson C.D. H Social Sciences (General) HA Statistics HB Economic Theory HF Commerce HG Finance This paper studies the relationship between residential property prices and macroeconom- ic and demographic determinants in Malaysia. In the years following the Asian nancial crisis, property prices in Malaysia rose substantially, resulting in an affordability crisis and ultimately policy responses to the problem. Using unit root, Johansen-Juselius cointe- gration, VECM-based Granger causality tests and variance decomposition, and consider- ing quarterly data that covers 2000-2015 period, we established that residential property price growth is principally driven by strong demographic performance and population growth and is backed by the low interest rate environment and rising consumer prices. Household income and level of GDP do not appear to contribute to property price growth. Certain distortions and asymmetries in the Malaysian real estate markets are documented: oversupply in the higher price segment of the market coupled with the lack of affordable housing in the lower price segment; household income growth lagging behind GDP and property price growth, thereby dampening housing demand; growing rental markets in major urban areas as a result of the affordability crisis; and a quality mismatch between buyers’ preferences and housing supply. Keywords: property prices; housing; cointegration Faculty of Economics and Business, University of Zagreb and De Gruyter Open 2018-12-05 Article PeerReviewed text en http://ir.unimas.my/id/eprint/33189/1/Ivan.pdf Trofimov, Ivan D. and Nazaria, Md. Aris and Xuan, Dickson C.D. (2018) Macroeconomic and Demographic Determinants of Residential Property Prices in Malaysia. Zagreb International Review of Economics & Business, 21 (2). pp. 71-96. ISSN 1331-5609 https://content.sciendo.com/configurable/contentpage/journals$002fzireb$002f21$002f2$002farticle-p71.xml DOI: 10.2478/zireb-2018-0015
institution	Universiti Malaysia Sarawak
building	Centre for Academic Information Services (CAIS)
collection	Institutional Repository
continent	Asia
country	Malaysia
content_provider	Universiti Malaysia Sarawak
content_source	UNIMAS Institutional Repository
url_provider	http://ir.unimas.my/
language	English
topic	H Social Sciences (General) HA Statistics HB Economic Theory HF Commerce HG Finance
spellingShingle	H Social Sciences (General) HA Statistics HB Economic Theory HF Commerce HG Finance Trofimov, Ivan D. Nazaria, Md. Aris Xuan, Dickson C.D. Macroeconomic and Demographic Determinants of Residential Property Prices in Malaysia
description	This paper studies the relationship between residential property prices and macroeconom- ic and demographic determinants in Malaysia. In the years following the Asian nancial crisis, property prices in Malaysia rose substantially, resulting in an affordability crisis and ultimately policy responses to the problem. Using unit root, Johansen-Juselius cointe- gration, VECM-based Granger causality tests and variance decomposition, and consider- ing quarterly data that covers 2000-2015 period, we established that residential property price growth is principally driven by strong demographic performance and population growth and is backed by the low interest rate environment and rising consumer prices. Household income and level of GDP do not appear to contribute to property price growth. Certain distortions and asymmetries in the Malaysian real estate markets are documented: oversupply in the higher price segment of the market coupled with the lack of affordable housing in the lower price segment; household income growth lagging behind GDP and property price growth, thereby dampening housing demand; growing rental markets in major urban areas as a result of the affordability crisis; and a quality mismatch between buyers’ preferences and housing supply. Keywords: property prices; housing; cointegration
format	Article
author	Trofimov, Ivan D. Nazaria, Md. Aris Xuan, Dickson C.D.
author_facet	Trofimov, Ivan D. Nazaria, Md. Aris Xuan, Dickson C.D.
author_sort	Trofimov, Ivan D.
title	Macroeconomic and Demographic Determinants of Residential Property Prices in Malaysia
title_short	Macroeconomic and Demographic Determinants of Residential Property Prices in Malaysia
title_full	Macroeconomic and Demographic Determinants of Residential Property Prices in Malaysia
title_fullStr	Macroeconomic and Demographic Determinants of Residential Property Prices in Malaysia
title_full_unstemmed	Macroeconomic and Demographic Determinants of Residential Property Prices in Malaysia
title_sort	macroeconomic and demographic determinants of residential property prices in malaysia
publisher	Faculty of Economics and Business, University of Zagreb and De Gruyter Open
publishDate	2018
url	http://ir.unimas.my/id/eprint/33189/1/Ivan.pdf http://ir.unimas.my/id/eprint/33189/ https://content.sciendo.com/configurable/contentpage/journals$002fzireb$002f21$002f2$002farticle-p71.xml
_version_	1701166557834510336
score	13.211869

Macroeconomic and Demographic Determinants of Residential Property Prices in Malaysia

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