Housing is human basic requirement and the most important and peculiar of commodities. Unlike the most other commodities, it is complex package of goods and services that extends well beyond the shelter provided by dwelling itself. Housing is also primary determinant of personal security autonomy, comfort well being and status, and the ownerships itself structures access to other scarce resources, such as occupational, educational, medical, financial and leisure facilities. Housing may also be termed as one of the longest life of all durable goods (Muth, 1989) statement taking from previous review done by Wang Leong Seng.
Shelter is one of the human basic physiological need (Maslow's Hierarchy of Needs). In this modern era, shelter comes in a form of house and it is the most important component of the socio-economy sector. This has laid to the formation of many policies and programs aimed at ensuring that all Malaysians, particularly the low-income group, have access to adequate shelter and related facilities
To most individuals housing represents the largest single investment item of a lifetime. This is especially true as family incomes increase and housing viewed less as a basic consumption and more as a key to a secure future. Developing countries have learned that the provision of decent housing for all cannot be left to the play of the market forces alone. Whereas the well-to-do few have no trouble in obtaining comfortable homes, the majority of families in the developing countries go without adequate housing and related facilities. Therefore, the governments found it necessary to intervene in the production of housing for their population.
From economic overview, Malaysia has reached a defining moment in its development path. Vision 2020 is not possible without economic, social and government transformation. Malaysia now moving from middle income to be a higher income economy country. For achieving this, the housing industry in Malaysia is regarded as one of the major industries contributing to the economic and social development of the country.
Taking an article from the Real Estate and Housing Developers’ Association (REHDA) of Malaysia, 50% of members expect property prices to rise by up to 20% during the first half of 2010. Price stability is expected by 30% of respondents, while less than 5% anticipate price falls. Transactions in the first half of 2009 were 30% down on the same period in 2008, according to the Valuation and Property Service Department (JPPH).
According to article take from Global Property Guide, Malaysia’s housing market was hit by the global economic slowdown in 2008 and 2009, with political instability and roiling business confidence. Average property prices fell -0.9% in 2009 when adjusted for inflation. Some developers deferred project launches, while others scaled back. Malaysia’s GDP contracted 3.6% in 2009, due to the global recession, after rising 5.75% annually from 2002 to 2008. Consumption growth slowed sharply. Malaysia’s housing market is expected to recover in 2010, after falling house prices and low sales during 2009. This is due to an expectation of a stronger economy in 2010. Low interest rates, better access to loans, and favourable taxes are also expected to stimulate the housing market and strong growth showed as Malaysia’s GDP in the first quarter 2010, at 10.1 %.
1.2 Background of the Study
This topic will focus on the effect of interest rate and inflation rate, and real income on housing loan demand. This topic should be choose because it will give the researcher ideas of relationship between housing loan demand and interest rate, inflation rate and real income.
Nowadays housing loan has become one of the important banking products. Most banks in Malaysia has provided housing loan to customer and now they were compete each other to give their customer...