Malaysian Housing Investment Information Price Modelling

MALAYSIAN HOUSING INVESTMENT INFORMATION PRICE MODELLING

Assoc. Prof.Aminah Md Yusof (PhD)

Faculty of Civil Engineering

Universiti of Technology Malaysia

81310 UTM Skudai

ABSTRACT

Research on housing set out for various reasons but the focus of all research lies in the three main traits: price, affordability and ownership. Whilst affordability captures the attention of social scientist, an interest in property investment identifies price determinants and what actually paid for a house and whether the decision to invest in housing is guided by sufficient information.

This research aims at analyzing the impact of macro and micro determinant of house price in five selected location in Malaysia. A literature review reveals that house price is determined by an inter play of some macro factors such as income per capita. Twelve macro models proved that economic indicators are significant in explaining the price variation. The finding indicates that for all models, economic growth plays an important role in price but as the income-related variables are included in the model, income-related variables gained significance. Thus, the regression models led to a conclusion that price is greatly influenced by income and income-related factors.

While this finding pertains to the national and state level, local market is investigated via the development of hedonic equation. A total of twenty-six (26) models have been developed for five different locations in Malaysia. Transaction prices of secondary double storey terrace houses are regressed against the identified attributes and collected from secondary and primary sources. Appropriate statistical analysis has been performed to minimize any potential technical disability in the model development which may affect the interpretation ability. Stepwise regression process is employed to eliminate multicollinearity that might affect the stability of the models.

The analysis indicates that price is actually specific to a particular location. One location is greatly explained by building area, which means people are paying for larger area. Whilst in some other location, the price is significantly explained by the locational related factors. The findings for each location are quite consistent even though there is a tendency of shift in paying preference. For example Penang imposed higher implicit price observed in the model for distance factor, but in 2000s model shows that price is dominated by various factors. It shows that the implicit prices for each attribute vary from one year to another. Hence suggest that the price paid is not fixed but need adjustment from time to time.

The findings thus suggests that it is quite impossible to draw general conclusion for the local market as it is influenced by factors or attributes that pertains to or specific to the particular market.

Keywords: house price modelling, macro and micro determinants and hedonic analysis