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Objective : At the end of the

course student should be able to: Explain the Housing demand and supply in

Malaysia.

Describe the objective of governmenthousing policy.

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FEATURES OF HOUSING

Houses as assets

Demand for housing services

Buying or renting Derived demand

Diverse bundle of services:

shelter & comfort, independence & privacy,status, security & Investment.

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Choice between buying or renting & between

different types of houses is influence by utility

functions which in turn are converted into

demand functions via economic variables:

PRICE, INCOME, WEALTH, TASTE and ETC

Location, Heterogeneous, Durable

Legally & politically influenced, Government

intervention, Taxation and Finance.

Imperfect information & Imperfect market

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Housing Market

Rented MarketDemand from households who opt to

purchase housing service by renting.

Supply through public & private bodies. House purchase market

Demand for household who opt to purchase

housing service by buying the asset for owneroccupation & landlords who buy the asset for

renting/investment purposes.

Source of supply building industry & second

hand dwellin s.

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Finance Market

F

inancing house purchase - private purchase& public purchase.

Source of finance Banks, finance institution,

treasury (ministry of finance), EPF withdrawal.

Renovation and Repair market.

Improvement or maintaining the flow of

services from the assets.

Supply is from the building Industry.

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Housing Purchase Market.

Determinants of demand

Demographic factor

IncomePrice

The availability & price of substitutes.

The availability of creditwealth

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Determine of supplyExisting house being resold (second hand

houses)

New Buildings

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Supply of second hand houses

Mobility factor Family reason, personalreason, change of employment, change in

income level, changes in house price level.

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Supply of new houses

PriceCosts

Availability of credit

Availability & profitability of other worksSeasonal factors

Building process

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Determinants of supply elasticitys of new

housing:Approval process Planning, conversion &

subdivision, building.

Rate of building PROCESS.

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Price Level

In a free market, the price level of house willbe determined by the interaction of demand

and supply:

Demand = f(Income, price, rents, availability

of credit, wealth, demographic factor)

Supply = Supply of secondhand houses +

supply of new houses.

= f (mobility) + f (price, costs,availability of credit, availability of

other building work, seasonal factors,

delays in the building process)

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Market for rented housing

Determinants of demand

Price

IncomeWealth

Price of other goods

Availability of rented accommodationDemographic factors

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Determinants of supply:

House for relettingHouses to be let for first time.

Rental income

Asset Value

Alternative to renting

Availability of finance for house purchase

Statutory limitations rent control.

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Urban Housing Problems

Market operation- demand, supply, distribution,financial perspective.

Efficiency vs. Distribution.

Demand vs. Needs

Quality housing

Low income housing

Delivery system sell then build vs. build then sell

Abandoned projects Overhang

Government Intervention.