IDEAS home Printed from https://ideas.repec.org/a/vrs/remava/v30y2022i4p74-88n5.html
   My bibliography  Save this article

Prospecting Housing Bubbles in Malaysia

Author

Listed:
  • Hamid Norfiqiri

    (Faculty of Built Environment and Surveying Universiti Teknologi Malaysia)

  • Razali Muhammad Najib

    (Faculty of Built Environment and Surveying Universiti Teknologi Malaysia)

  • Azmi Fatin Afiqah

    (Faculty of Built Environment and Surveying Universiti Teknologi Malaysia)

  • Daud Siti Zaleha

    (Faculty of Built Environment and Surveying Universiti Teknologi Malaysia)

  • Yunus Nurhidayah Md.

    (Faculty of Built Environment and Surveying Universiti Teknologi Malaysia)

Abstract

There have been extensive studies pertaining on bubble detection in literature, though very few investigate the Malaysian residential property market. The inflated housing market, however, has sparked widespread public anxiety and there has been a proliferation of comments and forecasts about the presence of housing bubbles in Malaysia throughout the last decade. The purpose of this paper is to assess the housing bubbles in Malaysia by using empirical models in detecting Malaysian residential property bubbles. This research employed the Markov Switching (MS) model to investigate the housing bubbles for the Malaysian residential property market. The findings revealed Malaysian housing prices to be relatively stable over the period 2010 to 2019, with states of upheaval occurring only during short-lived periods. Overall, Malaysian housing prices were generally steady between 2010 and 2019, albeit this has shifted slowly in recent years as economic turmoil faded. This study provides empirical results to explain the situation of Malaysian house prices in the recent years.

Suggested Citation

  • Hamid Norfiqiri & Razali Muhammad Najib & Azmi Fatin Afiqah & Daud Siti Zaleha & Yunus Nurhidayah Md., 2022. "Prospecting Housing Bubbles in Malaysia," Real Estate Management and Valuation, Sciendo, vol. 30(4), pages 74-88, December.
    • Handle: RePEc:vrs:remava:v:30:y:2022:i:4:p:74-88:n:5
    DOI: 10.2478/remav-2022-0030
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/remav-2022-0030
    Download Restriction: no
    File URL: https://libkey.io/10.2478/remav-2022-0030?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. Vansteenkiste, Isabel & Hiebert, Paul, 2011. "Do house price developments spillover across euro area countries? Evidence from a global VAR," Journal of Housing Economics, Elsevier, vol. 20(4), pages 299-314.
    2. Markus K. Brunnermeier & Christian Julliard, 2008. "Money Illusion and Housing Frenzies," The Review of Financial Studies, Society for Financial Studies, vol. 21(1), pages 135-180, January.
    3. Chee Yin Yip & Woei Chyuan Wong & Hock Eam Lim, 2017. "Bubble Detection in the Malaysian Housing Market," Malaysian Journal of Economic Studies, Faculty of Business and Economics, University of Malaya & Malaysian Economic Association, vol. 54(2), pages 203-221, December.
    4. Christian Dreger & Konstantin A. Kholodilin, 2011. "Speculative Bubble on Housing Markets: Elements of an Early Warning System," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 1(4), pages 3-9.
    5. Shiller, Robert J, 1981. "Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends?," American Economic Review, American Economic Association, vol. 71(3), pages 421-436, June.
    6. Barberis, Nicholas & Greenwood, Robin & Jin, Lawrence & Shleifer, Andrei, 2018. "Extrapolation and bubbles," Journal of Financial Economics, Elsevier, vol. 129(2), pages 203-227.
    7. Maas, Daniel & Mayer, Eric & Rüth, Sebastian K., 2018. "Current account dynamics and the housing cycle in Spain," Journal of International Money and Finance, Elsevier, vol. 87(C), pages 22-43.
    8. Charles Rahal,, 2016. "Housing markets and unconventional monetary policy," Journal of Housing Economics, Elsevier, vol. 32(C), pages 67-80.
    9. Zhang, Chuanchuan & Jia, Shen & Yang, Rudai, 2016. "Housing affordability and housing vacancy in China: The role of income inequality," Journal of Housing Economics, Elsevier, vol. 33(C), pages 4-14.
    10. Tan Teck-Hong, 2010. "Base Lending Rate And Housing Prices: Their Impacts On Residential Housing Activities In Malaysia," International Conference on Business and Economic Research (ICBER 2010) Proceeding 2010-060, Conference Master Resources.
    11. Jose Eduardo Gomez-Gonzalez & Juliana Gamboa-Arbeláez & Jorge Hirs-Garzón & Andrés Pinchao-Rosero, 2018. "When Bubble Meets Bubble: Contagion in OECD Countries," The Journal of Real Estate Finance and Economics, Springer, vol. 56(4), pages 546-566, May.
    12. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Is the 2007 US Sub-Prime Financial Crisis So Different?: An International Historical Comparison," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(3), pages 291-299.
    13. Solé-Ollé, Albert & Viladecans-Marsal, Elisabet, 2019. "Housing booms and local spending," Journal of Urban Economics, Elsevier, vol. 113(C).
    14. Tuck Cheong Tang & Pei Pei Tan, 2015. "Real Interest Rate and House Prices in Malaysia: An Empirical Stud," Economics Bulletin, AccessEcon, vol. 35(1), pages 270-275.
    15. Adams, Zeno & Füss, Roland, 2010. "Macroeconomic determinants of international housing markets," Journal of Housing Economics, Elsevier, vol. 19(1), pages 38-50, March.
    16. Edward L. Glaeser, 2016. "Real Estate Bubbles and Urban Development," NBER Working Papers 22997, National Bureau of Economic Research, Inc.
    17. Dean Baker, 2005. "The Housing Bubble Fact Sheet," CEPR Reports and Issue Briefs 2005-22, Center for Economic and Policy Research (CEPR).
    18. Clark, Steven P. & Coggin, T. Daniel, 2011. "Was there a U.S. house price bubble? An econometric analysis using national and regional panel data," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(2), pages 189-200, May.
    19. Simon Stevenson, 2008. "Modeling Housing Market Fundamentals: Empirical Evidence of Extreme Market Conditions," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(1), pages 1-29, March.
    20. Kivedal, Bjørnar Karlsen, 2013. "Testing for rational bubbles in the US housing market," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 369-381.
    21. Tan Teck-Hong, 2010. "Base Lending Rate And Housing Prices: Their Impacts On Residential Housing Activities In Malaysia," Journal of Global Business and Economics, Global Research Agency, vol. 1(1), pages 1-14, July.
    22. Naseer, Areef Ahmed & Masih, Mansur, 2016. "Expect the unexpected: housing price bubble on the horizon in Malaysia," MPRA Paper 79721, University Library of Munich, Germany.
    23. Risse, Marian & Kern, Martin, 2016. "Forecasting house-price growth in the Euro area with dynamic model averaging," The North American Journal of Economics and Finance, Elsevier, vol. 38(C), pages 70-85.
    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. Tsai, I-Chun & Lin, Che-Chun, 2022. "A re-examination of housing bubbles: Evidence from European countries," Economic Systems, Elsevier, vol. 46(2).
    2. Xie, Zixiong & Chen, Shyh-Wei & Wu, An-Chi, 2019. "Asymmetric adjustment, non-linearity and housing price bubbles: New international evidence," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    3. Janusz Sobieraj & Dominik Metelski, 2021. "Testing Housing Markets for Episodes of Exuberance: Evidence from Different Polish Cities," JRFM, MDPI, vol. 14(9), pages 1-29, September.
    4. Lan, Hao & Moreira, Fernando & Zhao, Sheng, 2023. "Can a house resale restriction policy curb speculation? Evidence from a quasi-natural experiment in China," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 841-859.
    5. Gomez-Gonzalez, Jose Eduardo & Sanin-Restrepo, Sebastian, 2018. "The maple bubble: A history of migration among Canadian provinces," Journal of Housing Economics, Elsevier, vol. 41(C), pages 57-71.
    6. Le, Thai-Ha, 2015. "Do soaring global oil prices heat up the housing market? Evidence from Malaysia," Economics Discussion Papers 2015-8, Kiel Institute for the World Economy (IfW Kiel).
    7. Stijn Claessens & M Ayhan Kose, 2018. "Frontiers of macrofinancial linkages," BIS Papers, Bank for International Settlements, number 95.
    8. Glaeser, Edward L. & Nathanson, Charles G., 2015. "Housing Bubbles," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 701-751, Elsevier.
    9. Kajuth, Florian & Knetsch, Thomas A. & Pinkwart, Nicolas, 2013. "Assessing house prices in Germany: Evidence from an estimated stock-flow model using regional data," Discussion Papers 46/2013, Deutsche Bundesbank.
    10. Suleyman Basak & Hongjun Yan, 2010. "Equilibrium Asset Prices and Investor Behaviour in the Presence of Money Illusion," Review of Economic Studies, Oxford University Press, vol. 77(3), pages 914-936.
    11. Assaf, Ata & Demir, Ender & Ersan, Oguz, 2024. "Detecting and date-stamping bubbles in fan tokens," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 98-113.
    12. Malmendier, Ulrike & Pouzo, Demian & Vanasco, Victoria, 2020. "Investor experiences and international capital flows," Journal of International Economics, Elsevier, vol. 124(C).
    13. Theodore Panagiotidis & Panagiotis Printzis, 2016. "On the macroeconomic determinants of the housing market in Greece: a VECM approach," International Economics and Economic Policy, Springer, vol. 13(3), pages 387-409, July.
    14. Jesús Otero & Theodore Panagiotidis & Georgios Papapanagiotou, 2021. "Testing for exuberance in house prices using data sampled at different frequencies," Working Paper series 21-13, Rimini Centre for Economic Analysis.
    15. Hassan Gholipour Fereidouni & Usama Al-Mulali & Janice Y. M. Lee & Abdul Hakim Mohammed, 2016. "Dynamic Relationship between House Prices in Malaysia's Major Economic Regions and Singapore House Prices," Regional Studies, Taylor & Francis Journals, vol. 50(4), pages 657-670, April.
    16. Stefano Giglio & Bryan Kelly, 2018. "Excess Volatility: Beyond Discount Rates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(1), pages 71-127.
    17. Konstantin Kholodilin, 2015. "Speculative Bubbles in Urban Housing Markets in Germany," ERSA conference papers ersa15p67, European Regional Science Association.
    18. Nélson Leitão Paes & Cássio Da Nóbrega Besarria & Marcelo Eduardo Alves Da Silva, 2018. "Bubbles In The Prices Of Housing? Evidence To Brazil?S Economy," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 118, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    19. Noussair, C.N. & Powell, O.R., 2008. "Peaks and Valleys : Experimental Asset Markets With Non-Monotonic Fundamentals," Other publications TiSEM 9be9b88a-9251-4921-a913-6, Tilburg University, School of Economics and Management.
    20. Efthymios Pavlidis & Alisa Yusupova & Ivan Paya & David Peel & Enrique Martínez-García & Adrienne Mack & Valerie Grossman, 2016. "Episodes of Exuberance in Housing Markets: In Search of the Smoking Gun," The Journal of Real Estate Finance and Economics, Springer, vol. 53(4), pages 419-449, November.

    More about this item

    Keywords

    bubbles; house price; Malaysia; prospecting; Markov switching;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

    Statistics

    Access and download statistics

    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:vrs:remava:v:30:y:2022:i:4:p:74-88:n:5. 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: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    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.