The primary objective of this research is to identify macroeconomic factors that may impact housing affordability in the long run for Malaysia. By understanding these factors, policymakers will be better positioned to identify the appropriate elements to focus on when designing policies to improve housing affordability, particularly for the Bottom 40% (B40) income group. This study aligns with sustainable development goal (SDG) 11: Sustainable Cities and Communities, which emphasizes access to adequate, safe and affordable housing for all.
The study uses the Auto Regressive Distributed Lag–Error Correction Model (ARDL–ECM) using quarterly data from 2005Q1 to 2022Q4. Key macroeconomic variables analyzed include real gross domestic product (GDP), consumer price index (CPI), consumer sentiment index, business confidence index and exchange rate. Data are obtained from the National Property Information Center (NAPIC), Bank Negara Malaysia (BNM), Department of Statistics Malaysia (DOSM) and the Bank of International Settlements (BIS).
The results confirm the existence of a valid long-run relationship between housing affordability and the selected macroeconomic variables. These findings highlight the importance of integrating macroeconomic considerations into housing policy design.
This study contributes to the limited empirical literature on the macroeconomic determinants of housing affordability in a developing country context. Using the Housing Affordability Index, the study provides valuable insights for developing more targeted policy interventions to improve access to affordable housing for vulnerable populations in Malaysia.
