Macroeconomic Determinants of Housing Prices in Malaysia: Evidence from Time-Series Econometric Analysis

Abstract

This study examines the effects of population, unemployment rate, construction costs, income per capita, and interest rates on housing prices using annual data from 1990 to 2024. Adopting time series econometric analyses, including stationarity, the ARDL model, VAR, Granger causality and dynamic estimation of VDC and IRF. The results confirm a long-run equilibrium relationship between housing prices and the selected macroeconomic variables. Income per capita and construction costs positively influence housing prices, whereas interest rates have a significant negative effect. In the short run, only income per capita is significant. The findings provide important policy insights for improving housing affordability through sustainable income growth, prudent monetary policy, and efficient housing development. Future studies should incorporate regional and institutional factors to better explain housing price dynamics.