Hedonic Analysis of the Impact of Flood Events on Residential Property Values in Malaysia: A Study of Willingness to Pay

Ismail, Nur Hafizah; Karim, Mohd Zaini Abd; Basri, Bakti Hasan

doi:10.22452/mjes.vol56no1.4

Cited by 4 publications

(3 citation statements)

References 44 publications

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“…12. RM421 is derived from multiplying the average house price RM337,096 with 0.00125. Similar approach in inferencing consumer’s willingness to pay has been used by Thaler (1978), Linden and Rockoff (2008), Pope (2008) and Ismail et al (2019). The negative coefficient values of crime variables imply the household’s willingness to pay to avoid crimes.…”

Section: Notesmentioning

confidence: 99%

Estimating the impact of crime risk on housing prices in Malaysia

Wong

Azhari

Abdullah

et al. 2019

IJHMA

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Purpose The purpose of this study is to examine the impact of crime risk on housing prices at a national level in Malaysia during the period from 1988 to 2016. Design/methodology/approach A hedonic regression approach was used to estimate the Malaysian households’ valuation for crime risk. Specifically, the state-level property index on the state-level reported crime rate was regressed while controlling for state-level socioeconomic variables. The macroeconomic panel nature of the data set provides the merit to use a panel dynamic model instead of the traditional static panel data techniques (fixed effects or first difference). Findings Panel dynamic estimators consistently show a negative impact of crime risks on housing prices. The estimated elasticity of housing prices with respect to crime risks ranges from −0.141 to −0.166, in line with existing literature using micro level data. In fact, householders in crime hotspot states are willing to pay more for crime reduction compared to householders in non-hotspot states. The willingness to pay has also increased since the implementation of nationwide crime reduction plans in 2010. Research limitations/implications This is the first study that has examined the Malaysian people’s willingness to pay to reduce crime. This information is important in determining the optimal level of government expenditures for public safety. Originality/value This is the first study to examine the relationship between crime rates and housing prices in Malaysia. This study contributes to the literature by examining the impact of crime rates on housing prices at a national level by using panel dynamic models. The macro level data results are consistent and complement the existing literature based on micro level data.

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Section: Notesmentioning

confidence: 99%

Estimating the impact of crime risk on housing prices in Malaysia

Wong

Azhari

Abdullah

et al. 2019

IJHMA

View full text Add to dashboard Cite

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“…Currently, the Malaysian government provides unscheduled flood relief assistance to affected individuals in the form of monetary aid, up to a maximum of RM500 per affected household. Nevertheless, the speed of disbursement poses challenges, and the provided amount is insufficient to cover the necessary flood recovery efforts (Ismail et al, 2019). Nonetheless, contended that governmental aid is often perceived as a form of free social welfare, potentially fostering a dependency on post-disaster government relief.…”

Section: Malaysiamentioning

confidence: 99%

“…This dependency can adversely affect people's incentive to actively participate in disaster mitigation and loss prevention measures. Consequently, it becomes imperative to establish and implement a comprehensive national insurance framework that ensures adequate funding for rehabilitation endeavors and facilitates a prompt recovery process for flood victims (Ismail et al, 2019).…”

Section: Malaysiamentioning

confidence: 99%

Mitigating Flood Risk in Malaysia through Flood Insurance: Exploring the Feasibility of the United States and Japanese Approaches

Ridzuan,

Razali,

et al. 2023

IJARBSS

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Floods have the potential to occur in any location and at any time due to sustained rainfall lasting for several days. In light of these situations, governments that are hesitant to assume these heightened risks may perceive a greater desirability in expanding the involvement of private insurance companies. Nevertheless, the inherent communal nature of these risks necessitates active government intervention to provide sufficient insurance coverage. While there have been considerable studies conducted on flood insurance, there is a noticeable dearth of studies that particularly examine the flood insurance structure in Malaysia. The efficacy of catastrophe recovery in developed nations is contingent upon the crucial functions fulfilled by insurance and government assistance. Nevertheless, it is less common for developing nations to engage in such practices. Hence, this study aims to analyze the flood insurance approaches employed in the United States and Japan. Additionally, the secondary objective involves assessing the current state of flood insurance practices in Malaysia and evaluating its feasibility in adopting flood insurance strategies similar to those implemented in the United States and Japan. This study adopts a library-based approach, and the expected outcome of this research is to propose recommendations for Malaysia to improve its flood insurance system. This investigation adds to the existing body of knowledge by offering fresh perspectives on the efficacy of flood insurance practices in the United States and Japan, and their applicability within the context of Malaysia.

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