EVALUATION OF FACTORS INFLUENCING BUBBLES IN THE MALAYSIAN HOUSING MARKET ECONOMY: THE CASE FOR MALAYSIA’S MAJOR CITIES

Abstract

This research paper studies on what are the factors that influences a housing market to crash, particularly for the major cities in Malaysia. This research will allow us to understand what are the fundamental factors that drives house prices and what are the effects to the housing market if such fundamental are deviated. Secondary data is therefore collected for 3 major cities of Malaysia; Kuala Lumpur, Johor and Pulau Pinang, during the bubble period to be analysed and to evaluate on what are the factors that were deviated giving rise to a housing bubble. Findings shows that fundamentals such as affordability, efficient supply and real-effective demand were negated which infers to a deviation of fundamentals. Recommendations to review existing policies and enhancing practices is therefore presented which may assist in resolving and mitigating housing bubbles from re-occurring.