Residential property price hike and speculation

This report provides an analytical overview of the behaviour of property price in Malaysia by examining factors influencing the property prices. It aims to determine whether property prices in Malaysia can be explained by the fundamental factors (macroeconomic and financial) or it is due to other un...

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Main Authors:	Haron, Razali, Ibrahim, Khairunisah
Format:	Conference or Workshop Item
Language:	English English
Published:	2018
Subjects:	HG4001 Financial management. Business finance. Corporation finance.
Online Access:	http://irep.iium.edu.my/66509/ http://irep.iium.edu.my/66509/12/66509%20-programme.pdf http://irep.iium.edu.my/66509/1/IRERS%202018%20Property%20Price%20Hike%20%26%20Speculation.pdf

id	iium-66509
recordtype	eprints
spelling	iium-665092018-10-10T06:49:51Z http://irep.iium.edu.my/66509/ Residential property price hike and speculation Haron, Razali Ibrahim, Khairunisah HG4001 Financial management. Business finance. Corporation finance. This report provides an analytical overview of the behaviour of property price in Malaysia by examining factors influencing the property prices. It aims to determine whether property prices in Malaysia can be explained by the fundamental factors (macroeconomic and financial) or it is due to other unexplained factors. One of the unexplained factors could perhaps be speculation activities and this study intends to explore this possibility. This investigation on the existence of speculation in property market contributes significantly to the body of knowledge thus fills the gap in the literature of property market, particularly in the Malaysian setting. Several quantitative research methods and time-series econometric analyses are employed to meet the objectives of the study and these include the Dynamic Ordinary Least Square (DOLS), Johansen Cointegration Test, Autoregressive Distributed Lags (ARDL) Long Run Estimation, Vector Error Correction Model (VECM), Vector Autoregressive (VAR) and Augmented Dickey-Fuller (ADF). The findings from this study reveal that, based on the different segments of property prices (aggregate, terraced, detached, semi-detached, high-rise) and different states, most of the factors do have significant relationship with property price. In addition, the cointegration analysis indicates that the property price and its factors are cointegrated for all property market segments across states. This implies the presence of a long run relationship between the property price and its determining factors, despite slow adjustment of property price towards equilibrium in the long run. Slow adjustment denotes a persistent deviation from price equilibrium reflecting inefficiency in the residential property market in Malaysia. Results of the granger-causality test indicate that current property price is influenced only by its own past values, which means today’s property price is influenced by the previous three months property price plus the cost of construction. Furthermore, there is a presence of ripple effect in which the house prices in KL, Negeri Sembilan, Perak, Penang and Melaka have spreading effect on other states in Malaysia and this implies that the residential property market in Malaysia is integrated. This study concludes that the residential property price hike in Malaysia is impacted by fundamental factors and is not speculative in nature. 2018 Conference or Workshop Item NonPeerReviewed application/pdf en http://irep.iium.edu.my/66509/12/66509%20-programme.pdf application/pdf en http://irep.iium.edu.my/66509/1/IRERS%202018%20Property%20Price%20Hike%20%26%20Speculation.pdf Haron, Razali and Ibrahim, Khairunisah (2018) Residential property price hike and speculation. In: 9th International Real Estate Research Symposium IRERS 2018, 23rd April - 25th April 2018, Bangi, Selangor. (Unpublished)
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English
topic	HG4001 Financial management. Business finance. Corporation finance.
spellingShingle	HG4001 Financial management. Business finance. Corporation finance. Haron, Razali Ibrahim, Khairunisah Residential property price hike and speculation
description	This report provides an analytical overview of the behaviour of property price in Malaysia by examining factors influencing the property prices. It aims to determine whether property prices in Malaysia can be explained by the fundamental factors (macroeconomic and financial) or it is due to other unexplained factors. One of the unexplained factors could perhaps be speculation activities and this study intends to explore this possibility. This investigation on the existence of speculation in property market contributes significantly to the body of knowledge thus fills the gap in the literature of property market, particularly in the Malaysian setting. Several quantitative research methods and time-series econometric analyses are employed to meet the objectives of the study and these include the Dynamic Ordinary Least Square (DOLS), Johansen Cointegration Test, Autoregressive Distributed Lags (ARDL) Long Run Estimation, Vector Error Correction Model (VECM), Vector Autoregressive (VAR) and Augmented Dickey-Fuller (ADF). The findings from this study reveal that, based on the different segments of property prices (aggregate, terraced, detached, semi-detached, high-rise) and different states, most of the factors do have significant relationship with property price. In addition, the cointegration analysis indicates that the property price and its factors are cointegrated for all property market segments across states. This implies the presence of a long run relationship between the property price and its determining factors, despite slow adjustment of property price towards equilibrium in the long run. Slow adjustment denotes a persistent deviation from price equilibrium reflecting inefficiency in the residential property market in Malaysia. Results of the granger-causality test indicate that current property price is influenced only by its own past values, which means today’s property price is influenced by the previous three months property price plus the cost of construction. Furthermore, there is a presence of ripple effect in which the house prices in KL, Negeri Sembilan, Perak, Penang and Melaka have spreading effect on other states in Malaysia and this implies that the residential property market in Malaysia is integrated. This study concludes that the residential property price hike in Malaysia is impacted by fundamental factors and is not speculative in nature.
format	Conference or Workshop Item
author	Haron, Razali Ibrahim, Khairunisah
author_facet	Haron, Razali Ibrahim, Khairunisah
author_sort	Haron, Razali
title	Residential property price hike and speculation
title_short	Residential property price hike and speculation
title_full	Residential property price hike and speculation
title_fullStr	Residential property price hike and speculation
title_full_unstemmed	Residential property price hike and speculation
title_sort	residential property price hike and speculation
publishDate	2018
url	http://irep.iium.edu.my/66509/ http://irep.iium.edu.my/66509/12/66509%20-programme.pdf http://irep.iium.edu.my/66509/1/IRERS%202018%20Property%20Price%20Hike%20%26%20Speculation.pdf
first_indexed	2023-09-18T21:34:26Z
last_indexed	2023-09-18T21:34:26Z
_version_	1777412725822980096

Residential property price hike and speculation

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