SWOT Sime Darby
SWOT Sime Darby
SWOT Sime Darby
LITERATURE REVIEW
2.0 Introduction
The purpose of this study is to determine the variables affecting the affordable housing.
This section contains a review of the theoretical framework and empirical evidence on the factors
affecting affordable housing in different countries. In this part, the theoretical frameworks that
been put forward by previous researchers will be discussed, followed by findings. Section 2.1
presents the theoretical frameworks, Section 2.2 reviews the empirical findings and Section 2.3 is
the concluding remarks for Chapter 2.
Based on the study of Aris et al., (2018), they have the similar findings in factors
influencing the prices for residentital properties in Malaysia as well as their relationship towards
residential property prices. The independent variable used in this study is interest rates, gross
domestic product, population growth, household income, inflation and lending rates whereas
house price is the dependent variable. The results of this study found that there are only two
variables which are the population growth and inflation were found to be positively and
significantly correlated with the housing price in Malaysia. This results further indicates that the
factor contributes to the rise of the residential housing price in a country is when there is an
increasing rate in the population. The increase in demand of home ownership by the citizen could
lead on to higher housing price. In short, both of this study tells us that an increase in the
population will increases the demand for housing and therefore housing prices increase.
Mariadas, Selvanathan, and Tan (2016) analysed the factors influencing housing price in
Klang Valley, Malaysia. The objective of this study is to examines empirically whether the
increasing trend in the Malaysian housing price is associated to changes in the population,
construction cost, housing speculation, and inflation rate. Correlation analysis and multiple
regression analysis were used as analytical technique. Findings shows that the relationship
between population and housing price is positively related.
However, there are studies that shows negative relationship between total population and
housing price index. Lin (2012) has examined the factors that lead to rising in house prices over
time and across cities in China. The method that used in this study is the regression analysis
method. The dependent variable in this study include housing price while the independent
variable is total population, government revenue, savings per household, urbanization level,
foreign direct investment (FDI), migration rate, average salary of different industries per capita
and lastly investment in real estate. Findings claimed that the income and savings disparity, FDI
amount and migration rate can cause housing price different among various cities in particular
years. But, over time, the population, the FDI amount, and migration seemed to be uncorrelated
with housing prices, but increases in real estate investment were significant determinants over
time.
Based on the study of Loh, Sik, Tan and Chan (2017), it analysed the significant
relationship between macroeconomic factors and movements of property price in Japan. The
researcher has used Ordinary Least Square (OLS) Method in the study. The variables employed
included property price, gross domestic product (GDP), interest rate, unemployment rate and
inflation rate. The findings of this study show that gross domestic product on property price in
Japan is insignificant. However, the inflation rate, interest rate, and unemployment rate on
property price in Japan are significant. The general results of the study obtained found that
unemployment rate have the positive relationship in determining the property price index.
Ganeson and Muin (2015) analysed the factors which could significantly impact the
housing price in Malaysia. The aim of this study is to develop a significant econometric model
that can be used to forecast Malaysian housing price. The variables that have been selected
include gross domestic product, inflation, unemployment rate and population. This study has
used time series data that covers a period of 23 years from 1988 to 2010 by using multiple
regression method. In this study, it is proven that only the inflation rate and unemployment rate
are significantly related to house price in Malaysia. Findings show that inflation rate has high
correlation with house price, and unemployment rate can also affect house price.
Xu and Tang (2014) studied on the determinants of UK house prices, it examines the
determinants of house prices in UK. This paper has used time series data which is based on the
quarterly data from year 1971Q1 to year 2012Q4 by applying cointegration test and error
correction model for the method used. House prices is employed as dependent variable whereas
construction cost, credit, disposable income, gross domestic product (GDP), interest rate, money
supply and unemployment rate are employed as independent variables. The cointegration test
shows that construction cost, credit, GDP, interest rate and unemployment rate have a positive
impact on house prices, while for the disposable income and money supply are negatively
correlated with house prices. For the error correction model, the results indicate that the growth
of house prices is affected by the growth of construction cost, credit, interest rate and disposable
income in the short run, and among which the interest rate is the most significant determinant.
According to the study of Cohen and Karpavičiūtė (2017), it evaluates the effect of GDP,
unemployment, inflation, interest rate, emigration and the means of macroprudential policy on
housing prices in Lithuania. In this study, Granger Causality Test and the Augmented Dicky-
Fuller (ADF) Test are used as analytical technique. The variables included are housing prices as
dependent variable and GDP, unemployment, inflation as well as interest rate as independent
variables. The results of this study conclude that inflation, interest rate and emigration are not
causal determinants of housing prices, which mostly depend on GDP, unemployment, the means
of macroprudential policy and the average housing prices in the previous period.
Based on the study of Tiong (2016), it aims to identify the factors that affect housing
affordability among the middle-income household in Malaysia. The method that used in this
study is by conducting a questionnaire survey. Variables used in this study include housing
affordability as the dependent variable, and non-monetary factors (age, health status, education
level, type of occupation) as well as monetary factors (household expenditures, house prices,
household income, mortgage, housing loan, difficulty to get housing loan) as the independent
variables. Finding shows that education level is one of the factors that affects the housing
affordability among middle-income household. As education levels are highly correlated to
incomes, hence those middle-income households who have better education are less likely to be
unable to afford a house. Hence, it indicates that a better education enables middle-income
household to find a better job and earn higher incomes and therefore could afford a house.
2.2.4 Income
Aris et al., (2018) studied about the factors influencing the prices for residentital
properties in Malaysia as well as their relationship towards residential property prices The
independent variable used in this study is interest rates, gross domestic product, population
growth, household income, inflation and lending rates whereas house price is the dependent
variable. The results of the study shows that monthly income have significant relationship with
affordable housing price. This study clearly indicates that there was strong relationship between
household incomes and the type of a property, meaning those with high income are able to afford
property with higher price, while with lower income they might buy a affordable house with a
lower price.
1) Ong (2013)
http://globalbizresearch.org/economics/images/files/73848_JEIEJB_%20Tze%20San%20Ong.pdf
4) Lin (2012)
https://baylor-ir.tdl.org/bitstream/handle/2104/8581/fangshi_lin_masters.pdf?sequence=1&isAllowed=y
9) Tiong (2016)
https://www.academia.edu/28841893/FACTORS_AFFECTING_HOUSING_AFFORDABILITY_AMO
NG_MIDDLE-_INCOME_HOUSEHOLD_IN_BINTULU
Chan, V. K. M., Sik, K. M., Tan, J. Y., & Loh, S. Y. (2017). The Macroeconomic Factors
Affecting Movements of Property Price: Evidence from Japan (Doctoral
dissertation, UTAR).
Mariadas, P. A., Selvanathan, M., & Hong, T. K. (2016). A Study on Housing Price in
Klang Valley, Malaysia. International Business Research, 9(12), 103-109.
San Ong, T. (2013). Factors affecting the price of housing in Malaysia. Available on the
Internet:< http://www. globalbizresearch. com/images/files/73848_JEIEJB_%
20Tze% 20San, 20.