A system dynamics model of Malaysia house pricing

Abstract

The difficulty to own a house has been a major concern especially among major cities in the world. As the worldwide issue, house prices also have been in the limelight in Malaysia. This is due to the unaffordable prices that tend to escalate over time. The factors that affect house prices are revolving around supply and demand theory either at micro or micro level. There are a lot of factors that found to be correlated as stated from the previous study such as housing characteristics, population, exchange rate, investment, inflation and liquidity. However, there have been shortcomings of study on the liquidity and investment factors toward the house prices. Therefore, this study aims to specifically analyse the influential factors of liquidity and investment toward house prices by using system dynamic approach. The model presumes the liquidity ratios stability and the amount spent on investment in residential properties will affect the house prices significantly. Analysing the trend of rising prices during recent years and forecasting its future development using system dynamic approach is significant, since it can help the authority and society to thoroughly understand on how liquidity and investment activity would affect the house prices.