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Supply elasticity of new housing supply in Malaysia: an analysis across housing sub-markets

Author

Listed:
  • Geok Peng Yeap

    (School of Social Sciences, Universiti Sains Malaysia)

  • Hooi Hooi Lean

    (School of Social Sciences, Universiti Sains Malaysia)

Abstract

This study estimates the price elasticity of new housing supply in Malaysia. It models the new housing supply for different types of houses namely, detached, high-rise, semi-detached and terraced houses. This study employs structural approach that relates housing start to house price, construction cost and interest rate. The price elasticity of new housing supply is estimated directly from the coefficient of house price. The model is estimated based on autoregressive distributed lagged (ARDL) approach by using quarterly data covers the sample period from 2002 to 2015. The results show that housing start is positively related to house price. An increase in house price pushes the quantity supplied of new houses but the magnitude is less than unity showing that new housing supply is price inelastic in Malaysia during the period. Among the four types of houses, the supply of high-rise houses has the highest elasticity while the supply of detached houses has the lowest elasticity.

Suggested Citation

  • Geok Peng Yeap & Hooi Hooi Lean, 2020. "Supply elasticity of new housing supply in Malaysia: an analysis across housing sub-markets," Economics Bulletin, AccessEcon, vol. 40(1), pages 807-820.
    • Handle: RePEc:ebl:ecbull:eb-19-00934
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    References listed on IDEAS

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    Cited by:

    1. Jie Wang & Biyu Peng & Xiaohua Xia & Zhu Ma, 2021. "Are Housing Prices Sustainable in 35 Large and Medium-Sized Chinese Cities? A Study Based on the Cheap Talk Game and Dynamic GMM," Sustainability, MDPI, vol. 13(22), pages 1-18, November.

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    More about this item

    Keywords

    housing supply; elasticity; house prices; new construction; Malaysia;
    All these keywords.

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs

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