IDEAS home Printed from https://ideas.repec.org/a/ukm/jlekon/v53y2019i2p55-65.html
   My bibliography  Save this article

Middle Income Household Spending Patterns on Housing in Malaysian State Capital Cities: Where Does All the Money Go?

Author

Listed:
  • Latimaha, Rusli

    (Faculty of Business, Economics and Accountancy Universiti Malaysia Sabah 88400 Kota Kinabalu Sabah MALAYSIA)

  • Bahari, Zakaria

    (Director Centre for Islamic Development Management Studies (ISDEV) University Sains Malaysia 11700 Minden, Penang MALAYSIA)

  • Ismail, Nor Asmat

    (School of Social Science University Sains Malaysia 11700 Minden, Penang MALAYSIA)

Abstract

This paper examines the factors influencing the expenditure pattern of middle-income households on housing in selected state capital cities in Malaysia by focusing on mortgage and rental expenses. Three state capital cities were chosen (George Town in Pulau Pinang, Kuala Lumpur and Johor Bahru in Johor) and a survey was carried out with 473 observations that were used for estimations by using a censored Tobit model. The results indicate that household income is statistically significant and does indeed affect mortgages but not the rental expenses in the selected state capital cities. Moreover, there is strong evidence of a relationship between family size and the number of rooms with the mortgage and rental expenditure. The analysis also indicates that there is a different pattern of expenditure on mortgage and rental between the different ethnic groups in Malaysia. The Chinese and Indian races tend to spend more on mortgages and less on rental compared to the Malays. Further, the gender and age of household heads are found to be insignificant in terms of influencing mortgages but do affect rental expenditure. In addition, middle-income households in Johor Bahru pay more on mortgages and in Kuala Lumpur such households pay more for housing rental. It is concluded that changes in spending patterns are starkly different across state capital cities in Malaysia and mortgage repayments represent a large proportion of household expenditure.

Suggested Citation

  • Latimaha, Rusli & Bahari, Zakaria & Ismail, Nor Asmat, 2019. "Middle Income Household Spending Patterns on Housing in Malaysian State Capital Cities: Where Does All the Money Go?," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(2), pages 55-65.
    • Handle: RePEc:ukm:jlekon:v:53:y:2019:i:2:p:55-65
    DOI: http://dx.doi.org/10.17576/JEM-2019-5302-5
    as

    Download full text from publisher

    File URL: http://www.ukm.my/jem/wp-content/uploads/2021/06/jeko_532-5.pdf
    Download Restriction: no
    File URL: https://libkey.io/http://dx.doi.org/10.17576/JEM-2019-5302-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Louise B. More, 1913. "The Cost of Living for a Wage-Earner's Family in New York City," The ANNALS of the American Academy of Political and Social Science, , vol. 48(1), pages 104-111, July.
    2. Birdsall, N. & Graham, C. & Pettinato, S., 2000. "Stuck in the Tunnel: Is Globalization Muddling the Middle Class?," Papers 14, Brookings Institution - Working Papers.
    3. Regmi, Madhav & Paudel, Krishna & Khanal, Aditya & Koirala, Krishna H., 2015. "Consumption Expenditure Pattern Of Rural And Urban Households In Namibia: A Quantile Regression Approach," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196689, Southern Agricultural Economics Association.
    4. McDonald, John F & Moffitt, Robert A, 1980. "The Uses of Tobit Analysis," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 318-321, May.
    5. Benus, J & Kmenta, J & Shapiro, Harold T, 1976. "The Dynamics of Household Budget Allocation to Food Expenditures," The Review of Economics and Statistics, MIT Press, vol. 58(2), pages 129-138, May.
    6. repec:eme:ijhma0:ijhma-04-2017-0039 is not listed on IDEAS
    7. Trudi Renwick, 1998. "Basic Needs Budgets Revisited: Does the U.S. Consumer Price Index Overestimate the Changes in the Cost of Living for Low-Income Families?," Feminist Economics, Taylor & Francis Journals, vol. 4(3), pages 129-142.
    8. Abdul Wahab, Mohd Aqmin & Shahiri, Hazrul Izuan & Mansur, Mustazar & Zaidi, Mohd Azlan Shah, 2018. "Kos Sara Hidup Tinggi di Malaysia: Pertumbuhan Pendapatan Isi Rumah yang Perlahan atau Taraf Hidup yang Meningkat," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(1), pages 117-133.
    9. Soberon-Ferrer, Horacio & Dardis, Rachel, 1991. "Determinants of Household Expenditures for Services," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 17(4), pages 385-397, March.
    10. Lauren Krivo & Robert Kaufman, 2004. "Housing and wealth inequality: Racial-ethnic differences in home equity in the United States," Demography, Springer;Population Association of America (PAA), vol. 41(3), pages 585-605, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Latimaha, Rusli & Bahari, Zakaria & Ismail, Nor Asmat, 2018. "Factors Influencing the Basic Needs Budget Among the Middle Income Earners in Selected Major Cities in Malaysia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(3), pages 29-39.
    2. Helen H. Jensen & Steven T. Yen, 1996. "Food Expenditures Away From Home by Type of Meal," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 44(1), pages 67-80, March.
    3. Alston Lee J. & Mueller Bernardo, 2018. "Priests, Conflicts and Property Rights: the Impacts on Tenancy and Land Use in Brazil," Man and the Economy, De Gruyter, vol. 5(1), pages 1-26, June.
    4. Kumar, Nagesh & Saqib, Mohammed, 1996. "Firm size, opportunities for adaptation and in-house R & D activity in developing countries: the case of Indian manufacturing," Research Policy, Elsevier, vol. 25(5), pages 713-722, August.
    5. Catalina Amuedo-Dorantes & Kusum Mundra, 2013. "Immigrant Homeownership and Immigration Status: Evidence from Spain," Review of International Economics, Wiley Blackwell, vol. 21(2), pages 204-218, May.
    6. Cox, Thomas L. & Briggs, Hugh, 1989. "Heteroscedastic Tobit Models: The Household Demand for Fresh Potatoes Revisited," Staff Papers 200482, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    7. Yen H. T. Nguyen & Tuyen Q. Tran & Dung T. Hoang & Thu M. T. Tran & Trung T. Nguyen, 2023. "Land quality, income, and poverty among rural households in the North Central Region, Vietnam," Poverty & Public Policy, John Wiley & Sons, vol. 15(2), pages 150-172, June.
    8. Sanae Tashiro, 2009. "Differences in Food Preparation by Race and Ethnicity: Evidence from the American Time Use Survey," The Review of Black Political Economy, Springer;National Economic Association, vol. 36(3), pages 161-180, December.
    9. Delorme, Francois & St-Cerny, Suzie, 2014. "La classe moyenne au Québec s’érode-t-elle vraiment : Contour et évolution [Is Quebec's Middle Class Really Shrinking : Overview and Evolution]," MPRA Paper 85051, University Library of Munich, Germany.
    10. María Edo & Walter Sosa Escudero & Marcela Svarc, 2021. "A multidimensional approach to measuring the middle class," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(1), pages 139-162, March.
    11. Maria Luisa Mancusi & Andrea Vezzulli & Serena Frazzoni & Zeno Rotondi & Maurizio Sobrero, 2018. "Export and Innovation in Small and Medium Enterprises: The Role of Concentrated Bank Borrowing," Economica, London School of Economics and Political Science, vol. 85(337), pages 177-204, January.
    12. Walter Sosa-Escudero & Sergio Petralia, 2011. "Anatomy of Distributive Changes in Argentina," Chapters, in: Werner Baer & David Fleischer (ed.), The Economies of Argentina and Brazil, chapter 10, Edward Elgar Publishing.
    13. Michael A. Clemens & Claudio Montenegro & Lant Pritchett, 2016. "Bounding the Price Equivalent of Migration Barriers," Growth Lab Working Papers 67, Harvard's Growth Lab.
    14. Torbern Anderson & Sumner J. La Croix, 1989. "Minority Pitchers in Major League Baseball: Is There Discrimination by Fans?," Working Papers 198913, University of Hawaii at Manoa, Department of Economics.
    15. Snower, Dennis J., 2019. "Toward global paradigm change: Beyond the crisis of the liberal world order," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 13, pages 1-19.
    16. Xue, Hong & Mainville, Denise Y. & You, Wen & Nayga, Rodolfo M., Jr., 2009. "Nutrition Knowledge, Sensory Characteristics and Consumers’ Willingness to Pay for Pasture-Fed Beef," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49277, Agricultural and Applied Economics Association.
    17. Suma Athreye, 1999. "The Determinants of Firm Innovative Behaviour: The Roles of Rivalry and Persistence," Working Papers wp131, Centre for Business Research, University of Cambridge.
    18. Chen, Jing & Rozelle, Scott, 2003. "Market Emergence And The Rise And Fall Of Backyard Hog Production In China," 2003 Annual meeting, July 27-30, Montreal, Canada 21969, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Richard Mussa, 2013. "Rural--urban differences in parental spending on children's primary education in Malawi," Development Southern Africa, Taylor & Francis Journals, vol. 30(6), pages 789-811, December.
    20. Gary V. Engelhardt & Anil Kumar, 2007. "Employer Matching and 401(k) Saving: Evidence from the Health and Retirement Study," NBER Chapters, in: Public Policy and Retirement, Trans-Atlantic Public Economics Seminar (TAPES), pages 1920-1943, National Bureau of Economic Research, Inc.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ukm:jlekon:v:53:y:2019:i:2:p:55-65. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Asri Abd Ghani (email available below). General contact details of provider: https://edirc.repec.org/data/feukmmy.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.