Housing Loan and the Price of Housing in Singapore

2020

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Abstract This paper exploits the homogeneity feature of the Singapore private residential condominium market and constructs matched home purchase price and rental price series using the repeated sales method. These matched series allow us to conduct time series analysis to examine the long-term present value relationship in the housing market. Three key findings are obtained. First, we fail to es...

Proceedings of the International Conference on Social Sciences, Humanities, Economics and Law, 2019

The growth of housing mortgage (HM) value displays a flourishing annual trend in line with the number of house purchase using the named credit facility. The amount of HM given by the bank to the buyer is affected by macroeconomic condition. The high inflation rate causes the people's buying power to weaken and triggers the interest rate to drop. Buyer receives benefit in a condition of reduced HM cost, as well as in the contrary condition, causing the proportion of HM to go up. This research aims to examine the relationship between macroeconomic growths toward the proportion of HM in Indonesia. Macroeconomic variables reviewed are Gross Domestic Product (GDP), inflation level, residential property price, and interest rate. The research period extends between the years 2005-2016 through Auto Regressive Distributed Lag (ARDL) bound test model technique in order to see the relationship between each variable. As a result, the test reveals a significant long-term relationship between the variables of GDP, inflation level, and residential property price with the HM proportion. However, no relation is found between the amount of interest rate and HM proportion.

2018

Using the aggregate and disaggregate dataset of various types of housing loan, this study examines the dynamic relationship between residential property prices, housing loan, construction output, and interest rate. Focusing on the aggregate data, it is noted that housing loan, construction output, and interest rate have significant and positive elasticities towards house prices in both short and longterm. The aggregate loan model indicates that about nine quarters or two years are required for full adjustment of house prices after experiencing a shock. Across the loan categories, first, the empirical analysis indicates that there is still a strong demand and potential opportunities for affordable properties. Second, homebuyers who purchase high-end properties will still borrow. Third, there is a significant and positive impact of interest rate on house prices in both shortand long-run, however, albeit a low percentage. The results of the error correction model imply the house prices...

2020

This paper examines the impact of government policies on house prices in Malaysia. In addition, this study also includes the role of gross domestic product, interest rate and total population as emphasised by the Life Cycle and Overlapping Generation Models. This study used an annual time series data from 1988 to 2017. By using autoregressive distributed lag (ARDL) framework, we develop a model of house price determination with a focus on government policy. This study revealed that PR1MA has a positive association with house prices. On the other hand, MM2H is not a primary contributor to the house prices in Malaysia.

Jurnal Ekonomi Malaysia, 2020

House prices in Malaysia are considered to be seriously unaffordable as the median all-house price is relatively higher than the annual median income. Although the issue of house prices is prevalent in the country, few studies have been done to determine factors that influence its movement. The current paper, therefore, attempts to investigate the causal relationship between macroeconomic variables and house prices in Malaysia by accounting for the existence of a structural break for the variables. It is identified that in the long run, macroeconomic variables are collectively significant in influencing house price movement while the individual impact of macroeconomic variables is varied. The rise in the level of interest rates, housing supply, and inflation will result in the decline in house prices while gross domestic product and local currency appreciation cause the price to increase. It was found that stock prices do not significantly influence house prices. Of all the macroeconomic factors analyzed, exchange rate fluctuations appear to be most significant in explaining the movement of house prices. In the short-run, all macroeconomic factors are individually significant in influencing house prices and it is also identified that house prices tend to move back into their long-run state after temporary macroeconomic shocks with the speed of adjustment around 5.2 percent quarterly. It is advised for the policymakers to constantly monitor the movement of macroeconomic factors and take necessary actions to cushion the adverse impact of the movement of house prices in the country.

Jurnal Ekonomi Malaysia, 2019

The objective of this study is to construct an enhanced house price index model in Malaysia. Having reviewed the current model of the Malaysian House Price Index (MHPI), it is currently found that this index is constructed based on the demand-driven variables. Previous studies explained that both macroeconomic factors (income levels, interest rates, and labor market) and supply factors are included in the construction of the house price index. This study begins by examining the determinants of the existing house price index in Malaysia. This study employs the Autoregressive Distributed Lag Model (ARDL) to discover the short and long-run dynamics between the variables. The study considers the quarterly data from the first quarter of 2008 to the fourth quarter of 2017. The findings reveal that construction cost (CC) and housing loan (HLN) are significant in determining HPI while Overnight Policy Rate (OPR) and land supply (LS) are insignificant with HPI. Then, the housing loan was found to be the most significant variable in determining HPI in Malaysia. Hence, we propose a new enhanced house price index that incorporates new demand and supply variables, by using the Laspeyres approach to calculate the new enhanced HPI. The analysis shows that the enhanced house price index has also recorded the same trend but with a lower value of prices as compared to the current MHPI. This enhanced HPI model may reflect the real situation of the housing market in Malaysia and it is expected to increase the affordability of the society in fulfilling their basic needs. This study may provide evidence for the involved parties to have some policy ramifications to further monitor and take appropriate measures to control the prices of property.

2017

This paper indicate about Malaysia has experienced the foremost changes of house price for over the past few years. This study will show that the performances of house prices in Malaysia are generally caused by the macroeconomics factor. One of it is the growth of economic that is gross domestic product rate. The housing price in Malaysia also influenced by household income because it related to the affordability of buyers to own a house. Moreover, there are strong inverse relationship between interest rates and house prices. That is, when the house prices rise and the interest rate drop. The main objective of this study is to measure the connection between macroeconomic variables and the housing price index. The specific objectives show which significant the macroeconomic variables affect the most on house price index. Dependent variable in this research is housing price index while the independent variables of this research will used of household income, interest rate, and GDP rat...

Zagreb International Review of Economics and Business, 2018

This paper studies the relationship between residential property prices and macroeconomic and demographic determinants in Malaysia. In the years following the Asian financial crisis, property prices in Malaysia rose substantially, resulting in an affordability crisis and ultimately policy responses to the problem. Using unit root, Johansen-Juselius cointegration, VECM-based Granger causality tests and variance decomposition, and considering quarterly data that covers 2000-2015 period, we established that residential property price growth is principally driven by strong demographic performance and population growth and is backed by the low interest rate environment and rising consumer prices. Household income and level of GDP do not appear to contribute to property price growth. Certain distortions and asymmetries in the Malaysian real estate markets are documented: oversupply in the higher price segment of the market coupled with the lack of affordable housing in the lower price seg...

The main purpose of this study is to measure the relationship between macroeconomic variables and the housing price. This paper examines empirically whether the increasing trend in the Malaysian housing price is related to changes in the gross domestic product (GDP), population, inflations rate, costs of construction, interest rate and real property gains tax (RPGT). The paper is exploratory in nature. The empirical data were collected from Valuation and Property Services Department of the Ministry of Finance Malaysia from 2001 to 2010. The paper provides empirical results that the gross domestic product (GDP), population and RPGT are the key determinants of housing prices. However, changes in housing prices may not necessarily be influenced by the gross domestic products (GDP), population and RPGT in Malaysia. The general finding of this paper strongly suggests that housing bubbles in the Malaysian residential property market are becoming bigger and stronger. The paper is useful for speculators, investors and buyers to know which factors to account for in housing investment decision. This paper can serve as a guide for the government in stabilizing the residential housing price in Malaysia.

CERN European Organization for Nuclear Research - Zenodo, 2022

Addressing the cause of escalating housing prices in the time of the COVID-19 pandemic is relevant but timely. Housing is both a consumption and an investment good and for many Filipinos, it is a dream worth going abroad for. This thesis studies the housing prices in the Philippines between 2000 to 2020. The overall objective of this thesis is to answer whether important macroeconomic factors can explain these housing prices. Using an econometric model, the Engel-Granger two-step approach captures the dynamic of long-and short-run relationships of the variables. The co-integration test result shows that GDP per capita is positively associated with housing prices by 1.24% in the long term, the inflation rate by 0.08%, and unemployment rate by 0.398%. Furthermore, the error correction model results show that GDP per capita negatively affects the housing price by 0.075% while the interest rate negatively affects it by 0.01497%. Error correction model result shows that short-term and long-term deviation in the previous level can be adjusted by 11% in the subsequent nine periods. Among the variables that affect housing prices, the GDP per capita has the most significant effect size. This thesis seeks to offer its findings that strongly suggest that policy makers need to pay close attention to the effect of the GDP per capita on housing prices and thus provide policies that adopt in various time horizons.