Malaysia: An Empirical Exploration Of Demand And Supply In Housing Market
Introduction:
The article provides an overview of factors that affect the demand and supply of housing market change in Malaysia with a transition economy. In the last decade, home prices in Malaysia have fluctuated considerably. This market volatility creates a significant impact on the Malaysians who want to buy or invest in housing. Several scholars have argued that housing prices are directly correlated to buyers’ ability to own a home, so the government plays a pivotal role in ensuring Malaysia’s housing prices are equivalent to income rates.
Therefore, this study is aimed at addressing various factors that impact Malaysian housing prices. The dynamics of prices on land and various types of completed buildings are also discussed. In this paper, it is seen how the housing market in Malaysia has been long discussed and has given attention to a great extent since the First Malaysia Plan. The finding presented in this paper may help to convince investor and house buyers that market volatility is not necessarily something to fear. The housing market is, to a certain degree predictable and hence house price movement may be detectable in advance.
Determination Of Demand And Supply In Malaysia Housing Market:
The housing market can be affected by macroeconomic and macroeconomic factors. Microeconomic factors are impacting all members of all members of society such as household, business man, and policymaker, etc. Real estate industry has played a major role in Malaysia’s economy. Several factors, macro and micro-economics influence demand and supply of housing market remarkably. A housing market is defined as a procedure of buying and selling houses and also bring sellers and buyers into close contact. In the market, demand and supply are dictated by the influence of the price on the market for a product or service. In particular, market motives are the distribution of assets and the maximization of buyers and sellers’ surpluses.
Factors that affect the housing demand market:
Housing is different from other commodities such as vehicles or land. Housing stock is heterogeneous, expensive commodity, durable, immobile, and has a high liability of moving costs. It does not only concern physical aspects, yet it involves a bundle of other things too for the same reason, it is the only kind typically consumed by a particular household at any one time. Housing demand can also be defined as; norms or level required for health, comfort, and the formation of standard of living for normal families. “Increased income implies increased demand for housing (Land), the increases demand is generally associated with a longer commute to work.”
Factors that affect the housing supply market:
Housing is perhaps the longest-lived of all durable goods. The amount of units actually available is essentially determined by the stock inherited from the past and decreases in value very gradually over time. Housing provision relates to the supply and demand of housing. Housing problems are usually associated with the shortage of housing supply to suit the demand and needs of the low-income people.
Housing sector indirectly contributes to the economic development of the country through the construction activities. Therefore, the government has always emphasized on the provision of adequate and affordable houses to be built. Hong Kong and Singapore are seen to have provided housing for a substantial proportion of their population. However, the argument to the statement would be because they are wealthy cities and having controlled population growth.
Affordable housing issue in Malaysia:
“Affordability is a term to describe the relationship between income and effective demand and supply of the commodity”. According to Ghani and Lee (1997), affordability does not only relate to household income, but also to the rising development cost of houses. In addition to the statement, Ibrahim (1993) stressed that the affordability to buy a house is related to the ability to pay for the house, and the ability to pay is related to the total income. Housing is significant for its durability and is relatively expensive. It is not common to purchase a house in a straight cash storms.
Regional Economic Crisis:
Banks play an important role in providing financing for house buyers, for the first time, with more than 70% of housing loan is being given to buyers. In the first nine months of 2017, the banks were approved RM 121.6 billion of new housing loans. History has shown that the additional in the property market can carry risks in a wider economy. Although there is imbalance in both residential and commercial property markets in Malaysia, it is a matter of concern, because the property sector is connected with more than 120 industries, collectively 10% of GDP and 1.4 million employees working in Malaysia.
Conclusion:
The economic downturn during the last few years has definitely given a negative effect on investor confidence in the housing market for the financial crisis. This study is found that a major reason that leads to the unsold housing units in the major city in Malaysia is the problem of mismatch between housing market demand and supply. According to literature reviews, the main contributing factors to the mismatch the factors of location, poor transportation network area establishes houses, lack of demand in some project localities and over-speculation of the developers.
Also Read: Low-Cost Housing: Policies and Constraints in Developing Countries