Mitigating housing glut: an application to the Malaysian housing market

Abstract

Purpose This paper aims to construct a model procedure to mitigate housing glut by using both qualitative and quantitative approach. The model applied in the Malaysian context analyzes the following: information contained in media articles and reports issued by Bank Negara Malaysia (BNM) on the housing market to extract the true picture of the housing glut issue; the relative impact (effectiveness) of housing affordability, housing prices and economic growth in influencing housing glut, and how it can be overcome so that appropriate preferential policies can be taken to mitigate the problem. Design/methodology/approach This study uses quarterly data from 2000 to 2017 to conduct economic analysis, economic theory analysis and cointegrating regression, whereas information from media-published housing articles and reports issued by BNM are examined and interpreted to draw the true picture of housing glut. Findings The results obtained from quantitative analysis show that housing affordability exerts very mild relative effect (0.0097) negatively on housing glut, whereas economic growth and housing price produce a relatively mild positive impact of (0.020) and (0.022), respectively, conflicting to the common consensus that the two factors have a significant effect on housing glut. Qualitatively, the results of this study show that housing glut seems to be relatively larger for affordable housing, which is contrary to the quantitative results, pointing to the existence of other influencing factors. Research limitations/implications There is an imperative need for a third-party survey to gain a comprehensive understanding of the market conditions and buyers’ sentiment and preference. Originality/value This study compares both quantitative and qualitative results with expected housing market movements and responses based on conventional wisdom.

A study of boundedly rational behaviour in housing choice: evidence from Malaysia

“…As mentioned earlier, it is complicated to understand decision-making behaviour where the two general motives (consumption and investment) in the housing market, (Brueckner, 1997), tend to blur the housing decision-making process. There are many studies conducted using secondary data (national housing databases and housing surveys) to understand homeownership, housing purchase intention, housing affordability and housing tenure; including Malaysia (Aguda and Ebohon, 2021; BuHamdan et al , 2021; Garcia and Figueira, 2021; Rangel et al , 2019; Yip et al , 2021). Most of the studies in Malaysia emphasized the high housing prices, housing affordability, economic growth and oversupply of housing (Ling et al , 2017; Rangel et al , 2019; Soon and Tan, 2019; Yap and Ng, 2018; Yip et al , 2021).…”

“…There are many studies conducted using secondary data (national housing databases and housing surveys) to understand homeownership, housing purchase intention, housing affordability and housing tenure; including Malaysia (Aguda and Ebohon, 2021; BuHamdan et al , 2021; Garcia and Figueira, 2021; Rangel et al , 2019; Yip et al , 2021). Most of the studies in Malaysia emphasized the high housing prices, housing affordability, economic growth and oversupply of housing (Ling et al , 2017; Rangel et al , 2019; Soon and Tan, 2019; Yap and Ng, 2018; Yip et al , 2021). However, these research studies ignore the importance of decision-making of the individual homebuyers.…”

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“…Left unaddressed, the housing supply surplus dilemma will be made worse, by the effects of the ongoing covid-19 pandemic. In the opinion of Yip et al (2020), housing affordability delivers a very slight negative impact of 0.0097 on housing surplus, while economic development and housing cost deliver a slight positive impact of 0.020 and 0.022 respectively. This is in conflict with the general viewpoint, that these two factors are significant determinants, of the housing surplus situation.…”

Examining key macroeconomic determinants of serviced apartments price index: the case of Kuala Lumpur, Malaysia

“…The Malaysian Government views the property overhang as a serious national issue (JPPH, 2019) because it will affect the profitability of the property and banking industry. An increasing number of property overhang in consecutive periods could signal an affordability issue (Hamzah and Zyed, 2020; Yip et al , 2020; Olanrewaju and Tan, 2018; Lee, 2014; Teck-Hong, 2012) along with the symptom of oversupply (Rangel et al , 2019; Trofimov et al , 2018). Besides, property overhang could be posed by a severe supply and demand mismatch in the Malaysian housing market.…”