GOVERNMENT INTERVENTIONS AND HOUSING PRICES: CAN POLICIES STABILIZE MALAYSIA'S RESIDENTIAL PROPERTY MARKET?
DOI:
https://doi.org/10.21837/pm.v24i44.2300Keywords:
Housing prices, government interventions, macroeconomic factors, panel data, MalaysiaAbstract
Malaysia's residential property market faces a long-standing affordability problem because house prices have risen faster than household incomes. Government housing programmes are the main policy response, but there is little evidence on whether they significantly affect market prices. This study examines how government housing intervention and state economic conditions affect residential property prices across all 13 Malaysian states and the Federal Territory of Kuala Lumpur, using a balanced panel of 14 units observed annually from 2010 to 2022. In this study, government intervention is measured by the number of completed Program Perumahan Rakyat (PPR) units. The model is estimated using fixed effects with year effects and Driscoll-Kraay standard errors. Two findings emerge. First, state economic conditions are associated with house prices in the expected directions: a one per cent larger population is associated with a house price index about 1.55 points higher and a one per cent higher income per capita with about 0.22 points higher. Second, government housing policy is positively and significantly associated with the price index, with a coefficient of 10.926 and a Driscoll-Kraay standard error of 3.009, significant at the 1% level. This association is not uniform: once the government policy variable is interacted with state economic conditions, all three interaction terms are significant, indicating that the relationship between public housing provision and house prices varies with a state's income level, population size and labour-market conditions. For planning practice, these results imply that targeted affordable housing program should be assessed using sub-market affordability, access and delivery indicators rather than an aggregate state house price index, which covers all market segments.
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