THE EFFECTS OF COVID-19 ON RESIDENTIAL PROPERTY PRICES IN MALAYSIA

Abstract

The physical distancing, lockdown, and other measures due to the COVID-19 pandemic have caused massive job loss and economic hardship, which would result in people not being able to pay their mortgages or rent.   Thus, the main objective of this study is to examine the effects of the Gross Domestic Product (GDP), inflation, investment, and interest rate on residential property prices in Malaysia before and during COVID-19. This research utilises the annual time series data from 1990 to 2020, and the empirical analysis is conducted using the multiple linear regression analysis modelling approach. The finding shows that GDP and interest rates are positive and statistically significant with residential property prices. Practitioners can use these findings to understand the pandemic's effect on house prices. This will provide some guidelines for a policy formulation to moderate the increase in residential property prices to maintain the country's economic stability and indirectly help the government realise its vision of becoming a high-income country between 2024 and 2028. This is the first study that examines the pricing behaviour of Malaysian house prices concerning the COVID-19 shocks. In addition, the study contributes to regional housing price studies by bridging the real estate literature gap.