Factors that affect changes of housing price in Malaysia

This study is an attempt to identify the factors that affect changes of house price in Malaysia from the year 1990 until 2011. The study also explores the relationship between the factors affect and house price in Malaysia. There are total of three macroeconomic variables such as inflation rate, gross domestic product rate (GDP) and interest rate were taken into the study with the house price index. The design of this study comprises of 88 secondary data of each variables from year 1990 until 2011 which are in yearly basis. Data has gathered from Bank Negara Malaysia, Trading Economics, and The Global Economy for 21 years. Researcher also collects the data from the World Bank website and it is used to confirm back all the variables that were related in determining the factors affects. In the process of findings, there are few types of analysis were tested by using STATA Version 10.1, there are descriptive statistics, unit root test, co-integration test and vector error correction model (VECM). The result indicates inflation rate and interest rate are the factors in this study have positive relationship related to the house price, but only gross domestic product rate shows negative relationship factors of the movement of house price index. The overall study intends to contribute and enhance both investors and government execution on scenario planning that have relationship upon the unpredictable rise of house price in Malaysia. This study might be resulted different for other country as the findings proved that the performance of house price in Malaysia is generally caused by the growth of economic situations.