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Boom-Bust Housing Price Dynamic: The Case of Malaysia

Author

Listed:
  • Yip Chee Yin

    (Universiti Tunku Abdul Rahman, Malaysia)

  • Woo Kok Hoong

    (Universiti Tunku Abdul Rahman, Malaysia)

  • Oon Kam Hoe

    (Universiti Tunku Abdul Rahman, Malaysia)

  • Nabihah Binti Aminaddin

    (Universiti Tunku Abdul Rahman, Malaysia)

  • Nurfadhilah Binti Abu Hasan

    (Universiti Tunku Abdul Rahman, Malaysia)

Abstract

This paper aims to differentiate housing price bubble from a housing price cycle through the investigation and analysis of the price volatility driving components using graphical analysis, cointegrating regression and mean reversion regression. The findings suggest that Malaysia is not facing any housing bubble at the point of time since there is no sharp upsurge and rapid fall of house prices (HP). The recent upswing in HP followed by a gradual coming down rather reflect a severe price cycle which started in 2009. The peak was observed in 2013 and since then has reversed into a continuous but gradual fall. The cycle is persisting and has not bottomed out yet. Our results show that the main reasons for the price booms are speculative herd instinct and lax in house loan lending policy before 2012. Subsequently the various anti cooling measures by the Malaysian government have helped to control price expansion

Suggested Citation

  • Yip Chee Yin & Woo Kok Hoong & Oon Kam Hoe & Nabihah Binti Aminaddin & Nurfadhilah Binti Abu Hasan, 2017. "Boom-Bust Housing Price Dynamic: The Case of Malaysia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 132-138.
    • Handle: RePEc:eco:journ1:2017-04-18
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Stability Test; Cointegrating Regression; Mean Reversion Regression; Bubbles; Cycles;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • N2 - Economic History - - Financial Markets and Institutions
    • G1 - Financial Economics - - General Financial Markets
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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