The macroeconomic determinants of housing prices in Malaysia

This research analyzed the impact of macroeconomic factors, such as gross domestic product (GDP), interest rates, and inflation rates, on housing prices in Malaysia. In recent years, residential property prices in Malaysia have seen a confluence of challenges and trends influenced by economic, political, and social factors. This subject includes the house affordability crisis, a surplus of unsold dwellings, the economic recession, and the COVID-19 pandemic. This study is essential as it enables the assessment of housing market fluctuations, evaluation of housing affordability, formulation of policy, and monitoring of market stability. This study aims to clarify the short-term and long-term correlations and causal relationships among these components to improve the understanding of the dynamics affecting housing prices. The research employs quantitative techniques and integrates econometric instruments, including the Augmented Dickey-Fuller (ADF) test and the Auto-Regressive Distributed Lag (ARDL) model. These methodologies provide a thorough examination of time-series data, producing insights into equilibrium relationships and instantaneous consequences. The data indicate significant interconnections among macroeconomic variables and their influence on property prices, emphasizing distinct trends before and after the outbreak. The study reveals that macroeconomic factors, including GDP and interest rates, significantly influence the housing price index in Malaysia. The results indicate a strong positive link between GDP and home prices, whereby economic growth enhances housing demand. The results enhance understanding of housing market dynamics, equipping policymakers, investors, and stakeholders with critical information to formulate strategies that reduce market volatility and enhance affordability. Future research may expand on these findings by examining regional disparities and the effects of governmental interventions on stabilizing the housing market. This study enhances comprehension of housing economics and the impact of macroeconomic policies in developing countries.