Advisory Center for Affordable Settlements & Housing

Document Download Download
Document Type General
Publish Date 05/02/2016
Author Nur Baizura Binti Mohd Shukor, Dr Sr Rosli Bin Said and Dr Rohayu Bin Abdul Majid
Published By EDP Sciences
Edited By Tabassum Rahmani
Uncategorized

In Malaysia the Relationship between Housing Finance and Macroeconomics Variables

Housing finance in Malaysia is one of the factors that contribute in the overall economy growth of the country. The purpose of this paper is to analyze the relationship of housing finance variable and the macroeconomic variables in Malaysia. By adopting time series technique of Vector Auto regression (VAR) and Impulse Response to determine the dynamic relationship between the macroeconomic and housing finance variable. The cointegration result shows that there exists a long run relationship between the macroeconomic variable and housing finance variable.

The finding from impulse response function indicates that Gross Domestic Product (GDP) response positively to the Primary Mortgage Market (PMM), which shows that during the good economy there are more housing loan extends by the banking institution. Meanwhile, interest rate response negatively to Secondary Mortgage Market (SMM), which implies that during the financial crisis, more housing loan sold to the Secondary Mortgage Market as one of the measure by the government to increase liquidity in banking institutions. As a conclusion, there is presence of relationship between the variable which change in one variable will affect the other variable in the long run.

Leave a Reply

Your email address will not be published. Required fields are marked *