Macroeconomics Factors Affecting Housing Price in Malaysia

This study explores how selected macroeconomic factors shape housing market movements in Malaysia, with particular emphasis on trends captured by the Malaysian Property House Price Index (MPHI). Drawing upon quarterly observations from 2015 through 2024, the analysis is carried out using an Ordinary Least Squares (OLS) estimation strategy, with Newey-West robust standard errors applied to address issues of heteroskedasticity and serial correlation. The empirical assessment centers on four principal economic indicators: gross domestic product (GDP), consumer prices (CPI), lending rates, and unemployment. Results reveal that GDP, lending rates, and unemployment levels all display statistically meaningful and positive associations with housing price shifts, whereas the effect of inflation—as measured by the CPI—does not reach significance. These findings differ from conventional assumptions, particularly those pertaining to the role of unemployment in affecting housing prices, which is often presumed to exert a downward pressure on them. Instead, the findings suggest that unemployment may act differently in certain economic contexts, possibly reflecting government intervention, housing supply rigidities, or speculative activity.