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The effects of macroeconomics policies on housing affordability in Malaysia

Housing affordability remains conundrum in Malaysia despite the initiatives taken by the government. Malaysia's median multiple house price has surpassed the three times median annual household income threshold for housing affordability over the past two decades. This implies that Malaysian hou...

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Main Author: Zarul Azhar, Nasir
Format: Thesis
Language:English
English
Published: 2022
Subjects:
HB Economic Theory
HD Industries. Land use. Labor.
Online Access:https://etd.uum.edu.my/10422/2/grant%20the%20permission_s902973.pdf
https://etd.uum.edu.my/10422/3/s902973_01.pdf
https://etd.uum.edu.my/10422/
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spelling my.uum.etd.104222023-03-29T01:10:21Z https://etd.uum.edu.my/10422/ The effects of macroeconomics policies on housing affordability in Malaysia Zarul Azhar, Nasir HB Economic Theory HD Industries. Land use. Labor. Housing affordability remains conundrum in Malaysia despite the initiatives taken by the government. Malaysia's median multiple house price has surpassed the three times median annual household income threshold for housing affordability over the past two decades. This implies that Malaysian housing is severely unaffordable, resulting in supply overhang issues which cause non-profitable investment to the developer from previously built housing units. This study aims to explore the role of government intervention through macroeconomic policy, including monetary and fiscal policies, on housing affordability in Malaysia. This study employed Public Interest Theory to emphasise the significance of government intervention in a market involving public interest, as a government is a benevolent regulator with adequate information and absolute enforcement powers. The Autoregressive Distributed Lag (ARDL) and Vector Autoregression (VAR) estimation techniques were employed on quarterly data involving 61 observations from the first quarter of 2006 until the first quarter of 2021. The results revealed that money supply, government expenditure and tax have significant short and long-run impacts on housing affordability except for interest rates. The long-run cointegration between fiscal policy variables (i.e., tax and government expenditure) and housing affordability in conjunction with its significant short-run relationship has highlighted the pivotal role of fiscal policy in influencing housing affordability. Monetary policy is only effective through changes in money supply (in both the long and short run) and interest rates (only in the short run) in the Malaysian housing market. Policymakers are recommended to emphasize more on regulating fiscal policy than monetary policy in order to promote housing affordability in Malaysia efficiently. In the future, studies related to perspective from supply-side could also be incorporated to obtain a more comprehensive estimated model. 2022 Thesis NonPeerReviewed text en https://etd.uum.edu.my/10422/2/grant%20the%20permission_s902973.pdf text en https://etd.uum.edu.my/10422/3/s902973_01.pdf Zarul Azhar, Nasir (2022) The effects of macroeconomics policies on housing affordability in Malaysia. Doctoral thesis, Universiti Utara Malaysia.
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Electronic Theses
url_provider http://etd.uum.edu.my/
language English
English
topic HB Economic Theory
HD Industries. Land use. Labor.
spellingShingle HB Economic Theory
HD Industries. Land use. Labor.
Zarul Azhar, Nasir
The effects of macroeconomics policies on housing affordability in Malaysia
description Housing affordability remains conundrum in Malaysia despite the initiatives taken by the government. Malaysia's median multiple house price has surpassed the three times median annual household income threshold for housing affordability over the past two decades. This implies that Malaysian housing is severely unaffordable, resulting in supply overhang issues which cause non-profitable investment to the developer from previously built housing units. This study aims to explore the role of government intervention through macroeconomic policy, including monetary and fiscal policies, on housing affordability in Malaysia. This study employed Public Interest Theory to emphasise the significance of government intervention in a market involving public interest, as a government is a benevolent regulator with adequate information and absolute enforcement powers. The Autoregressive Distributed Lag (ARDL) and Vector Autoregression (VAR) estimation techniques were employed on quarterly data involving 61 observations from the first quarter of 2006 until the first quarter of 2021. The results revealed that money supply, government expenditure and tax have significant short and long-run impacts on housing affordability except for interest rates. The long-run cointegration between fiscal policy variables (i.e., tax and government expenditure) and housing affordability in conjunction with its significant short-run relationship has highlighted the pivotal role of fiscal policy in influencing housing affordability. Monetary policy is only effective through changes in money supply (in both the long and short run) and interest rates (only in the short run) in the Malaysian housing market. Policymakers are recommended to emphasize more on regulating fiscal policy than monetary policy in order to promote housing affordability in Malaysia efficiently. In the future, studies related to perspective from supply-side could also be incorporated to obtain a more comprehensive estimated model.
format Thesis
author Zarul Azhar, Nasir
author_facet Zarul Azhar, Nasir
author_sort Zarul Azhar, Nasir
title The effects of macroeconomics policies on housing affordability in Malaysia
title_short The effects of macroeconomics policies on housing affordability in Malaysia
title_full The effects of macroeconomics policies on housing affordability in Malaysia
title_fullStr The effects of macroeconomics policies on housing affordability in Malaysia
title_full_unstemmed The effects of macroeconomics policies on housing affordability in Malaysia
title_sort effects of macroeconomics policies on housing affordability in malaysia
publishDate 2022
url https://etd.uum.edu.my/10422/2/grant%20the%20permission_s902973.pdf
https://etd.uum.edu.my/10422/3/s902973_01.pdf
https://etd.uum.edu.my/10422/
_version_ 1761674035120308224
score 13.211869

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