Real Interest Rate and House Prices in Malaysia: An Empirical Stud

Tuck Cheong Tang () and Pei Pei Tan

Economics Bulletin, 2015, vol. 35, issue 1, 270-275

Abstract: This study examines the relationship between real interest rate and real house prices in Malaysia. The analysis covers recent quarterly data from 2001 to 2013. The regression results show a negative effect of real interest rate on the Kuala Lumpur house prices, but it is not the case for the remaining five reported states in Peninsular Malaysia. The Granger-causality tests also provide positive findings. The direction of causation is from real interest rate to real MHPI (the Malaysian House Price Indexes). This study supports the ripple effect – the states' house prices are inter-caused, except for Pulau Pinang. These findings are relevant for policy implications.

Keywords: Causality; Real house prices; Real interest rates; Malaysia (search for similar items in EconPapers)
JEL-codes: E4 R2 (search for similar items in EconPapers)
Date: 2015-03-11
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Citations: View citations in EconPapers (3)

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