Macroeconomic Determinants of Malaysian House Prices: An Article Review

This paper synthesizes a review of the Malaysian housing market to identify its primary drivers, evaluate the effectiveness of its policy toolkit, and propose avenues for future research. Analysis of demand-side factors shows that real activity, income growth, and monetary conditions are key short-run drivers, while the exchange rate emerges as a particularly strong long-run influence due to imported input costs and its signaling of global financial conditions. The effectiveness of borrower-based macroprudential tools in mitigating credit-driven risks is also highlighted. On the supply side, localized overhang and limited developable land in urban nodes are identified as key challenges. The paper argues that effective policy requires strong coordination between demand-side management and structural supply reforms, with an emphasis on a risk-based approach to financial surveillance. It concludes by proposing high-value research, including state-level panel analysis, the use of satellite imagery to measure supply elasticity, microdata analysis of borrower behavior, and the development of a "house prices at risk" model to enhance policy calibration and communication.