scholarly journals Housing prices in peninsular Malaysia: supported by income, foreign inflow or speculation?

2019 ◽  
Vol 12 (3) ◽  
pp. 424-441 ◽  
Author(s):  
Wang Li Wong ◽  
Chin Lee ◽  
Seow Shin Koong
Keyword(s):  
Housing Market ◽  
Low Income ◽  
House Prices ◽  
Correction Term ◽  
Housing Prices ◽  
House Price ◽  
Peninsular Malaysia ◽  
Financial Asset ◽  
Content Type ◽  
The Impact

Purpose This paper is motivated by a concern about the ability of the average Malaysian income to catch up with the rapidly increasing house prices in Peninsular Malaysia. Financial innovation in financial system now regards houses as a financial asset and speculation vehicle. Therefore, a house purchase is made to acquire not merely a necessity but also a financial asset which can generate future returns. Given the problems in the housing market, this paper aims to examine the determinants of house prices in Malaysia, including those such as income, population, foreign inflow and speculation. Design/methodology/approach This study adopts panel data analyses, namely, the fixed effect model (FEM) and the pooled mean group (PMG), and uses data at state level in quarterly frequency, spanning from 2005Q1 to 2013Q4. Findings Based on the results of FEM, these determinants influence house prices significantly. Moreover, the PMG results suggest that there is convergence in the model, which are indicated by the significant and negative sign of the error correction term. In conclusion, the rapidly increasing house price is not caused by speculation activities in the housing market. More precisely, Malaysian income is capable of catching up with the increasing house prices. Practical implications As income remains to be one of the major drivers in influencing Malaysian house price, Malaysian Government shall continue the policies of supply low cost houses to the low-income groups and My First Home Scheme (SRP) by offering less stringent rules in applying house loan for the first-time house buyers. Originality/value This study used the actual data of foreign housing purchase obtained from Malaysia Valuation and Property Services Department to represent foreign inflow; therefore, the results will reflect the impact of foreign inflow in a better manner.

scholarly journals House prices and neighbourhood amenities: beyond the norm?

2018 ◽  
Vol 11 (2) ◽  
pp. 263-289 ◽  
Author(s):  
Michael James McCord ◽  
Peadar Thomas Davis ◽  
Paul Bidanset ◽  
William McCluskey ◽  
John McCord ◽  
...  
Keyword(s):  
Housing Market ◽  
House Prices ◽  
House Price ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Conditional Quantiles ◽  
Price Distribution ◽  
Regression Techniques ◽  
High Level ◽  
The Impact

Purpose Understanding the key locational and neighbourhood determinants and their accessibility is a topic of great interest to policymakers, planners and property valuers. In Northern Ireland, the high level of market segregation means that it is problematic to understand the nature of the relationship between house prices and the accessibility to services and prominent neighbourhood landmarks and amenities. Therefore, this paper aims to quantify and measure the (dis)amenity effects on house pricing levels within particular geographic housing sub-markets. Design/methodology/approach Most hedonic models are estimated using regression techniques which produce one coefficient for the entirety of the pricing distribution, culminating in a single marginal implicit price. This paper uses a quantile regression (QR) approach that provides a “more complete” depiction of the marginal impacts for different quantiles of the price distribution using sales data obtained from 3,780 house sales transactions within the Belfast Housing market over 2014. Findings The findings emerging from this research demonstrate that housing and market characteristics are valued differently across the quantile values and that conditional quantiles are asymmetrical. Pertinently, the findings demonstrate that ordinary least squares (OLS) coefficient estimates have a tendency to over or under specify the marginal mean conditional pricing effects because of their inability to adequately capture and comprehend the complex spatial relationships which exist across the pricing distribution. Originality value Numerous studies have used OLS regression to measure the impact of key housing market externalities on house prices, providing a single estimate. This paper uses a QR approach to examine the impact of local amenities on house prices across the house price distribution.

Causal effects of immigration inflows on house prices in a traditionally non-destination country

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Woei Chyuan Wong ◽  
Jan-Jan Soon
Keyword(s):  
Fixed Effects ◽  
Positive Impact ◽  
House Prices ◽  
Housing Prices ◽  
House Price ◽  
Developed Countries ◽  
Annual Data ◽  
Content Type ◽  
Variable Approach ◽  
The Impact

Purpose The purpose of this study is to examine the causal impact of international immigration inflows on housing prices at the state level in Malaysia from 2007 to 2018. Design/methodology/approach Hedonic regressions using both fixed effects and first difference approaches are used to estimate the impact of immigration inflows on house prices in Malaysia. This study deals with potential endogeneity of immigrants’ choices of destination states in Malaysia by using a shift-share instrument variable approach. Specifically, historical shares of immigrants in a state are used to predict current immigrant inflows to a particular state. The predicted value of immigration flows is then inserted into the house price regression models in place of the actual immigration flows. Findings Using annual data for 14 states from 2007 to 2018, this study documents the positive impact of immigration inflows on house prices in Malaysia. The authors find that a 1% increase in immigration inflows is associated with an increase of 10.2% (first difference) and 13.4% (fixed effects) in house prices. The economic impact is larger in magnitude than that found in developed countries. Contrary to existing studies that find immigration inflows to be associated with native flight, the authors find support for the attraction effects hypothesis, where immigration inflow is positive and significantly related to net native flows. Research limitations/implications The effects of immigration inflows are economically significant, considering that the effects are 10 times larger than those documented in the USA. Policymakers in Malaysia ought to monitor house price trends in immigrant-popular states to ensure that natives are not priced out by new immigrants. Originality/value To the best of the authors’ knowledge, this is perhaps the first study to focus on the relationship between immigration inflows and house prices in Malaysia. Focusing on Malaysia has at least two originality aspects. First, Malaysia is relatively not an immigrant-popular destination. Second, Malaysia has a multiracial and heterogenous society among its natives. The findings, obtained within these two settings, would therefore provide a wider scope of result generalization, and natural experiment grounds for causal implications of our results.

scholarly journals The sources of house price change: identifying liquidity shocks to the housing market

2016 ◽  
Vol 9 (1) ◽  
pp. 98-120 ◽  
Author(s):  
Paloma Taltavull de La Paz ◽  
Michael White
Keyword(s):  
Monetary Policy ◽  
Housing Market ◽  
Error Correction ◽  
House Prices ◽  
Price Change ◽  
Housing Prices ◽  
House Price ◽  
Content Type ◽  
The Uk

Purpose The purpose of this paper is to examine the role of monetary liquidity in house price evolution through examining the Asset (housing) Inflation channel. It identifies the main channels of transmission affecting house prices from monetary supply channels to house price change, examining how the Asset Price channel transmits changes in M1 to housing prices in Spain and the UK. Design/methodology/approach The paper uses Vector Auto Regression (VAR) and Error Correction models to test the Asset Inflation channel in the UK and Spain from 1991 to 2013 in two steps. In the first step, the supply elasticity is estimated through the long-term relationship between house prices and stock supply. The second step estimates a Vector Error Correction (VEC) to explain house price dynamics conditioned on supply reactions. The latter is defined as a long-term inverse demand model where housing prices are controlled by fundamentals in each market. Models allow forecast testing using Choleski impulse responses methodology. Findings Several results are found. In the supply model, both countries show rapid convergence to equilibrium with a larger elasticity of supply in Spain than in the UK but with a short run effect of new supply on prices in the UK. Regarding the Asset Inflation Channel model, the paper finds evidence of the existence of a housing accelerator effect in Spain, but not in the UK where changes in liquidity fully impact house prices in one direction. Research limitations/implications Implications of findings are mainly to forecast the effects of Monetary Policy measures in different economies. Practical implications The model supports the evaluation of different impacts of monetary policy in territories. It shows that the same policy will have different impacts in different housing markets and therefore highlights the importance of examining each market separately to identify the appropriate policy interventions. Originality/value This is the first paper that estimates the impact of the Asset Inflation Channel on house prices that endogenises housing market conditions and compares effects and interrelationships in two different economies.

scholarly journals The role and significance of planning in the determination of house prices in Australia: Recent policy debates

2021 ◽  
pp. 0308518X2198894
Author(s):  
Peter Phibbs ◽  
Nicole Gurran
Keyword(s):  
Land Use ◽  
Housing Market ◽  
Land Use Planning ◽  
House Prices ◽  
Housing Prices ◽  
House Price ◽  
Evidence Base ◽  
Urban Housing ◽  
Price Inflation ◽  
Depth Analysis

On the world stage, Australian cities have been punching above their weight in global indexes of housing prices, sparking heated debates about the causes of and remedies for, sustained house price inflation. This paper examines the evidence base underpinning such debates, and the policy claims made by key commentators and stakeholders. With reference to the wider context of Australia’s housing market over a 20 year period, as well as an in depth analysis of a research paper by Australia’s central Reserve Bank, we show how economic theories commonly position land use planning as a primary driver of new supply constraints but overlook other explanations for housing market behavior. In doing so, we offer an alternative understanding of urban housing markets and land use planning interventions as a basis for more effective policy intervention in Australian and other world cities.

scholarly journals Liquidity, interest rates and house prices in the euro area: a DSGE analysis

2016 ◽  
Vol 9 (1) ◽  
pp. 4-25 ◽  
Author(s):  
Margarita Rubio ◽  
José A. Carrasco-Gallego
Keyword(s):  
Interest Rates ◽  
Monetary Union ◽  
Euro Area ◽  
House Prices ◽  
Housing Prices ◽  
House Price ◽  
Dsge Model ◽  
Content Type ◽  
The Core ◽  
Dynamic Stochastic

Purpose This study aims to build a two-country monetary union dynamic stochastic general equilibrium (DSGE) model with housing to assess how different shocks contributed to the increase in housing prices and credit in the European Economic and Monetary Union. One of the countries is calibrated to represent the core group in the euro area, while the other one corresponds to the periphery. Design/methodology/approach In this paper, the authors explore how a liquidity shock (or a decrease in the interest rate) affects house prices and the real economy through the asset price and the collateral channel. Then, they analyze how a house price shock in the periphery and a technology shock in the core countries are transmitted to both economies. Findings The authors find that a combination of an increase in liquidity in the euro area coming from the common monetary policy, together with asymmetric house price and technology shocks, contributed to an increase in house prices in the euro area and a stronger credit growth in the peripheral economies. Originality/value This paper represents the theoretical counterpart to empirical studies that show, through macroeconometric models, the interrelation between liquidity and other shocks with house prices. Using a DSGE model with housing, the authors disentangle the mechanisms behind these empirical findings.

Rent or buy, what are the odds? Analysing the price-to-rent ratio for housing types within the Northern Ireland housing market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Daniel Lo ◽  
Michael James McCord ◽  
John McCord ◽  
Peadar Thomas Davis ◽  
Martin Haran
Keyword(s):  
Housing Market ◽  
House Prices ◽  
House Price ◽  
Main Property ◽  
Property Market ◽  
Important Indicator ◽  
Content Type ◽  
Rental Market ◽  
Price Series ◽  
The Relationship

Purpose The price-to-rent ratio is often regarded as an important indicator for measuring housing market imbalance and inefficiency. A central question is the extent to which house prices and rents form part of the same market and thus whether they respond similarly to parallel stimulus. If they are close proxies dynamically, then this provides valuable market intelligence, particularly where causal relationships are evident. Therefore, this paper aims to examine the relationship between market and rental pricing to uncover the price switching dynamics of residential real estate property types and whether the deviation between market rents and prices are integrated over both the long- and short-term. Design/methodology/approach This paper uses cointegration, Wald exogeneity tests and Granger causality models to determine the existence, if any, of cointegration and lead-lag relationships between prices and rents within the Belfast property market, as well as the price-to-rent ratios amongst its five main property sub-markets over the time period M4, 2014 to M12 2018. Findings The findings provide some novel insights in relation to the pricing dynamics within Belfast. Housing and rental prices are cointegrated suggesting that they tend to move in tandem in the long run. It is further evident that in the short-run, the price series Granger-causes that of rents inferring that sales price information unidirectionally diffuse to the rental market. Further, the findings on price-to-rent ratios reveal that the detached sector appears to Granger-cause those of other property types except apartments in both the short- and long-term, suggesting possible spill-over of pricing signals from the top-end to the lower strata of the market. Originality/value The importance of understanding the relationship between house prices and rental market performance has gathered momentum. Although the house price-rent ratio is widely used as an indicator of over and undervaluation in the housing market, surprisingly little is known about the theoretical relationship between the price-rent ratio across property types and their respective inter-relationships.

Are regional house prices stationary in Iran? New evidence using Fourier quantile unit root test

2019 ◽  
Vol 12 (5) ◽  
pp. 849-864
Author(s):  
Arash Hadizadeh
Keyword(s):  
Interest Rates ◽  
Housing Market ◽  
Unit Root ◽  
House Prices ◽  
Housing Prices ◽  
Unit Root Test ◽  
Generalized Least Squares ◽  
Main Concern ◽  
Content Type ◽  
Positive Effects

Purpose In the Iranian economy, investing in the housing market has been very important and beneficial for investors and households, because of inflationary environment, low real interest rates, underdeveloped financial and tax systems and economic sanctions. Hence, prediction of house prices is the main concern of housing market agents in the economy. The purpose of this paper is to test the stationary properties of Iran's provinces to improve the prediction of future housing prices. Design/methodology/approach In this paper, the authors have tested the stationary properties of 20 Iran’s province centers over the period from 1993 to 2017 using a novel Fourier quantile unit root test and conventional ordinary/generalized least squares (O/GLS) linear unit root/stationary tests. Findings According to conventional O/GLS linear unit root/stationary tests, most of the house prices series exhibit random walk behavior, whereas by applying the Fourier quantile unit root test, the null hypothesis of unit root is rejected for 15 out of 20 series. Other results indicated that house prices of cities responded differently to positive and negative shocks. Originality/value Previous studies only addressed conventional OLS or GLS linear unit root or stationary tests, but novel Fourier quantile unit root test was not used. New results were obtained based on this unit root test, that, as a priori knowledge, will help benefiting from the positive effects, or avoiding being victimized by the negative effects.

scholarly journals Untangling the nonlinear “knots” of UK’s housing prices

2019 ◽  
Vol 46 (5) ◽  
pp. 1083-1103
Author(s):  
Constantinos Alexiou ◽  
Sofoklis Vogiazas
Keyword(s):  
Housing Market ◽  
House Prices ◽  
Housing Prices ◽  
Positive Association ◽  
Research Area ◽  
Content Type ◽  
Nonlinear Ardl ◽  
Long Run ◽  
Short Run ◽  
The Uk

Purpose Housing prices in the UK offer an inspiring, yet a complex and under-explored research area. The purpose of this paper is to investigate the critical factors that affect UK’s housing prices. Design/methodology/approach The authors utilize the recently developed nonlinear ARDL approach of Shin et al. (2014) over the period 1969–2016. Findings The authors find that both the long-run and short-run impact of the price-to-rent (PTR) ratio and credit-to-GDP ratio on house prices (HP) is asymmetric whilst ambiguous results are established for mortgage rates, industrial production and equities. Apart from the novel framework of analysis, this study also establishes a positive association between HP and the PTR ratio which suggests a speculative behaviour and could imply the formation of a housing bubble. Originality/value It is the first study for the UK housing market that explores the underlying fundamental relationships by looking at nonlinearities hence, allowing HP to be tied by asymmetric relationships in the long as well as in the short run. Modelling the inherent nonlinearities enhances significantly the understanding of UK housing market which can prove useful for policymaking and forecasting purposes.

The Internet reshapes China's economic geography: micromechanisms and macro effects

2020 ◽  
Vol 3 (2) ◽  
pp. 259-283
Author(s):  
Chen Yang ◽  
Tongliang An
Keyword(s):  
Economic Geography ◽  
House Prices ◽  
House Price ◽  
The Internet ◽  
Dispersion Force ◽  
Content Type ◽  
The Real Estate ◽  
Real Estate Sector ◽  
Spatial Panel Data ◽  
The Impact

PurposeBy observing facts of the “reversal of agglomeration” of Chinese enterprises during the period of rapid Internet development and using a new economic geography model combined with the data of the real estate sector, this paper deduces the influence of the “reshaping mechanisms” of the Internet on China's economic geography based on the “gravitation mechanism” of the Internet that affects the enterprises and the “amplification mechanism” of the Internet that amplifies the dispersion force of house prices.Design/methodology/approachIn the empirical aspect, the dynamic spatial panel data model is used to test the micromechanisms of the impact of the Internet on enterprises' choice of location and the instrumental variable method is used to verify the macro effects of the Internet in reshaping economic geography.FindingsIt is found that in the era of the network economy, the Internet has become a source of regional competitive advantage and is extremely attractive to enterprises. The rapidly rising house price has greatly increased the congestion cost and has become the force behind the dispersion of enterprises. China's infrastructure miracle has closed the access gap which gives full play to network externalities and promotes the movement of enterprises from areas with high house prices to areas with low house prices.Originality/valueThe Internet is amplifying the dispersion force of congestion costs manifested as house prices and is reshaping China's economic geography. This paper further proposes policy suggestions such as taking the Internet economy as the new momentum of China's economic development and implementing the strategy of regional coordinated development.

scholarly journals A dynamic model for housing price spillovers with an evidence from the US and the UK markets

2018 ◽  
Vol 2 (1) ◽  
pp. 70-81 ◽  
Author(s):  
Alper Ozun ◽  
Hasan Murat Ertugrul ◽  
Yener Coskun
Keyword(s):  
New York ◽  
Real Estate ◽  
House Prices ◽  
Housing Prices ◽  
House Price ◽  
Housing Markets ◽  
Content Type ◽  
Real Estate Markets ◽  
Country Level ◽  
The Us

Purpose The purpose of this paper is to introduce an empirical model for house price spillovers between real estate markets. The model is presented by using data from the US-UK and London-New York housing markets over a period of 1975Q1-2016Q1 by employing both static and dynamic methodologies. Design/methodology/approach The research analyzes long-run static and dynamic spillover elasticity coefficients by employing three methods, namely, autoregressive distributed lag, the fully modified ordinary least square and dynamic ordinary least squares estimator under a Kalman filter approach. The empirical method also investigates dynamic correlation between the house prices by employing the dynamic control correlation method. Findings The paper shows how a dynamic spillover pricing analysis can be applied between real estate markets. On the empirical side, the results show that country-level causality in housing prices is running from the USA to UK, whereas city-level causality is running from London to New York. The model outcomes suggest that real estate portfolios involving US and UK assets require a dynamic risk management approach. Research limitations/implications One of the findings is that the dynamic conditional correlation between the US and the UK housing prices is broken during the crisis period. The paper does not discuss the reasons for that break, which requires further empirical tests by applying Markov switching regime shifts. The timing of the causality between the house prices is not empirically tested. It can be examined empirically by applying methods such as wavelets. Practical implications The authors observed a unidirectional causality from London to New York house prices, which is opposite to the aggregate country-level causality direction. This supports London’s specific power in the real estate markets. London has a leading role in the global urban economies residential housing markets and the behavior of its housing prices has a statistically significant causality impact on the house prices of New York City. Social implications The house price co-integration observed in this research at both country and city levels should be interpreted as a continuity of real estate and financial integration in practice. Originality/value The paper is the first research which applies a dynamic spillover analysis to examine the causality between housing prices in real estate markets. It also provides a long-term empirical evidence for a dynamic causal relationship for the global housing markets.

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