Open AccessTHE IMPACT OF MONETARY POLICY ON HOUSING AFFORDABILITY IN MALAYSIA
Author(s) -
Zarul Azhar Nasir,
Rosylin Mohd Yusof,
Ahmad Rizal Mazlan
Publication year - 2022
Publication title -
planning malaysia
Language(s) - English
Resource type - Journals
eISSN - 1675-6215
pISSN - 0128-0945
DOI - 10.21837/pm.v20i20.1083
Subject(s) - interest rate , quarter (canadian coin) , economics , cointegration , monetary policy , money supply , distributed lag , short run , monetary economics , macroeconomics , econometrics , archaeology , history
Housing affordability is a global concern, especially among researchers and policymakers around the world in both developed and developing countries. In Malaysia, it has been a decade since the median multiple house price reaching more than a tripled median household income threshold in term of housing affordability. This indicates that housing in Malaysia is seriously unaffordable. In general, this study was conducted to examine the impact of monetary policy on housing affordability in Malaysia. This study focuses on investigating both short and long-run relationships between money supply and interest rate on housing affordability. To achieve this goal, Autoregressive Distributed Lag (ARDL) estimation techniques were employed on a quarterly data from the first quarter of 2008 until the first quarter of 2021. The findings showed the existence of long-run cointegration between all indicators except for the interest rate. In addition, money supply, interest rate, and employment were found to be significant in the short run. In the matter of policy implication, it is best for policymakers to focus on regulating money supply rather than controlling interest rate in promoting housing affordability.