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Boom-Bust Housing Price Dynamic: The Case of Malaysia

Yip Chee Yin, Woo Kok Hoong, Oon Kam Hoe, Nabihah Binti Aminaddin and Nurfadhilah Binti Abu Hasan
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Yip Chee Yin: Universiti Tunku Abdul Rahman, Malaysia
Woo Kok Hoong: Universiti Tunku Abdul Rahman, Malaysia
Oon Kam Hoe: Universiti Tunku Abdul Rahman, Malaysia
Nabihah Binti Aminaddin: Universiti Tunku Abdul Rahman, Malaysia
Nurfadhilah Binti Abu Hasan: Universiti Tunku Abdul Rahman, Malaysia

International Journal of Economics and Financial Issues, 2017, vol. 7, issue 4, 132-138

Abstract: This paper aims to differentiate housing price bubble from a housing price cycle through the investigation and analysis of the price volatility driving components using graphical analysis, cointegrating regression and mean reversion regression. The findings suggest that Malaysia is not facing any housing bubble at the point of time since there is no sharp upsurge and rapid fall of house prices (HP). The recent upswing in HP followed by a gradual coming down rather reflect a severe price cycle which started in 2009. The peak was observed in 2013 and since then has reversed into a continuous but gradual fall. The cycle is persisting and has not bottomed out yet. Our results show that the main reasons for the price booms are speculative herd instinct and lax in house loan lending policy before 2012. Subsequently the various anti cooling measures by the Malaysian government have helped to control price expansion

Keywords: Stability Test; Cointegrating Regression; Mean Reversion Regression; Bubbles; Cycles (search for similar items in EconPapers)
JEL-codes: R3 N2 G1 J10 (search for similar items in EconPapers)
Date: 2017
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