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Regional House Prices and the Ripple Effect in Malaysia

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  • Hooi Hooi Lean
  • Russell Smyth

Abstract

This paper applies univariate and panel Lagrange multiplier (LM) unit root tests with one and two structural breaks to the ratio of the regional to national house price to examine the ripple effect for five different housing price indices (aggregate housing, detached housing, semi-detached housing, terrace housing and high-rise housing) across 14 regional locations in Malaysia. Segmentation is restricted to a small group of states across most housing types for which there is no long-run relationship with the Malaysian average. When all housing types are taken together, evidence of a ripple effect is generally found from the most developed states to the less developed states of Malaysia. While overall rates of conversion to the long-run equilibrium are consistent with a low level of persistence, there is some evidence of regional clusters based on similar speeds of adjustment in different parts of the country.

Suggested Citation

  • Hooi Hooi Lean & Russell Smyth, 2013. "Regional House Prices and the Ripple Effect in Malaysia," Urban Studies, Urban Studies Journal Limited, vol. 50(5), pages 895-922, April.
  • Handle: RePEc:sae:urbstu:v:50:y:2013:i:5:p:895-922
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    Cited by:

    1. Gong, Yunlong & Hu, Jinxing & Boelhouwer, Peter J., 2016. "Spatial interrelations of Chinese housing markets: Spatial causality, convergence and diffusion," Regional Science and Urban Economics, Elsevier, vol. 59(C), pages 103-117.
    2. Rangan Gupta & Christophe André & Luis Gil-Alana, 2015. "Comovement in Euro area housing prices: A fractional cointegration approach," Urban Studies, Urban Studies Journal Limited, vol. 52(16), pages 3123-3143, December.
    3. repec:uts:finphd:35 is not listed on IDEAS
    4. Tuck Cheong Tang & Pei Pei Tan, 2015. "Real Interest Rate and House Prices in Malaysia: An Empirical Stud," Economics Bulletin, AccessEcon, vol. 35(1), pages 270-275.

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