ISSN: 2225-8329
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Housing is a major industry where price mechanisms or market regulations are applied for efficiency, and house provision is controlled by governments. Malaysia is one of the countries that are facing an upward trend in demand for housing, and the increase in housing prices has become worrying. This paper investigated the impact of macroeconomic variables in the house price index in Malaysia from the period 1988 until 2017 by annually. The selected macroeconomics variables for this study are gross domestic product, consumer price index, base lending rate, and money supply. Autoregressive Distributed Lag (ARDL) estimation was used to investigate the short-run and long-run elasticities of the proposed econometric model based on the selected macroeconomic variable mention above. The results from the Augmented Dickey-Fuller and Phillips-Perron tests of stationarity indicated that all the variables were non-stationary at the level I (o) but stationary at the first difference I (1). The long-run elasticities showed that gross domestic product and base lending rate is significant and positively influenced house price index in Malaysia. Consumer price index and money supply have a negative impact on house price index in the long run.
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To cite this article: Rahman, M. F. A., Ridzuan, A. R. (2020). Factors that Determine House Price Index in Malaysia, International Journal of Academic Research in Accounting, Finance and Management Sciences 10 (1): 351-359.
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