Reasons for the Increment in Housing Prices in Malaysia

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Introduction
In recent years, certain parties have pointed out that housing prices have increased tremendously. While it is contentious whether or not such a trend exists, the general consensus is that the prices of properties in general have indeed increased, to a certain extent (as seen in the table below). Various parties have come to argue that such an increase in property prices is due to widespread speculation practised by a majority of the buyers. Other parties however argue that it is purely due to inflationary forces. In the sections that follow, we shall investigate what exactly drives the appreciation of property prices.

As we can observe from Table 1, the prices of properties in Malaysia surge gradually from the year 2006 till 2010. An increment of RM 40,869 for an average house pricing was recorded between the time periods of five years. This shows that various types of houses have their price increase regardless of states across Malaysia. The average price of a house is expectedly to increase continually in recent years.

Table 1: Malaysian House Price for the year 2006 – 2010

|Year |Change Over 12 Months (%) |All House Price (RM) | |2006 Q 1 |2.4 | | |Q 2 |1.4 |162,626 | |Q 3 |2.1 |163,148 | |Q 4 |4.8 |165,057 | | | |169,112 | |2007 Q 1 |4.8 | | |Q 2 |4.4 |170,864 | |Q 3 |5.4 |171,253 | |Q 4 |2.9 |173,329 | | | |174,410 | |2008 Q 1 |4.3 | | |Q 2 |4.2 |178,238 | |Q 3 |5.0 |178,516 | |Q 4 |2.5 |182,050 | | | |178,632 | |2009 Q 1 |0.7 | | |Q 2 |2.6 |179,571 | |Q 3 |1.5 |183,181 | |Q 4 |5.6 |184,715 | | | |188,542 | |2010 Q 1 |5.7 | | |Q 2 |6.2 |189, 604 | |Q 3 |7.9 |194,286 | |Q 4 |8.0 |199,085 | | | |203,495...
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