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Causality of Residential Properties Price Movements in Malaysia

  • Abdul Aziz, Ahmad Faizal
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    Many studies had been previously conducted to analyse factors that affects price of residential properties but none of these research addresses the issue specifically to Malaysia. This paper serves the purpose to fill in the gap whereby factors which were empirically proven to affect price of residential properties are tested with Malaysian data, covering the period from 1990 to 2009. Data used in this study were collected from Government’s official sources, i.e. as published by the Central Bank of Malaysia (Bank Negara Malaysia), Department of Statistics Malaysia and National Property Information Centre (NAPIC) of the Valuation and Property Services Department of Malaysia. The time series techniques namely cointegration, vector error correction model and variance decomposition were used to estimate the significance of identified variables to the price of residential properties. It is important for policymakers especially the Federal Government to know the variables that significantly influenced the price of residential properties as to control the price so as to preserve the wealth effect and to balance racial composition in an area.

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    File URL: https://mpra.ub.uni-muenchen.de/47682/3/MPRA_paper_47682.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 47682.

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    Date of creation: May 2011
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    Handle: RePEc:pra:mprapa:47682
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    1. Vahram Stepanyan & Tigran Poghosyan & Aidyn Bibolov, 2010. "House Price Determinants in Selected Countries of the Former Soviet Union," IMF Working Papers 10/104, International Monetary Fund.
    2. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    3. Case, Karl E. & Quigley, John M. & Shiller, Robert J., 2001. "Comparing Wealth Effects: The Stock Market versus The Housing Market," Department of Economics, Working Paper Series qt44k6g6vx, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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    14. Rizov, Marian, 2003. "The price of EU accession An insight into the Bulgarian real estate market," MPRA Paper 70583, University Library of Munich, Germany.
    15. Steven C. Bourassa & Patric H. Hendershott, 1995. "Australian Capital City Real House Prices, 1979-1993," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 28(3), pages 16-26.
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