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Running head: ARE REAL ESTATE PRICES CONSTANTLY ON THE RISE IN THE
WORLD?
Are real estate prices constantly on the rise in the world?
By Name of the Studen t
Tutor Name
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ARE REAL ESTATE PRICES CONSTANTLY ON THE RISE IN THE WORLD?
Table of Conte nts
Introd uc tio n ………………………….. ………………………….. ………………………….. ………………………….. 2
Litera ture Re vie w ………………………….. ………………………….. ………………………….. ………………….. 4
Inc rease in prope rty price in Ma la ysia ………………………….. ………………………….. ………………….. 4
Inc rease in prope rty price in C hina ………………………….. ………………………….. ………………………. 5
Inc rease in prope rty price in Japa n ………………………….. ………………………….. ………………………. 7
Re fe re nces ………………………….. ………………………….. ………………………….. ………………………….. .. 9
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ARE REAL ESTATE PRICES CONSTANTLY ON THE RISE IN THE WORLD?
Introductio n
The rising property price in Malaysia is evident in form of surge in the house price and
monitoring the relevant developments. The proportion of the annual price growth is evident in
form increase by 48.2% (Trofimo v and Xuan 2018 ). In this regard, it is im portant to note ho w
the property price has increased from 16.1% in the fourth quarter of 2020 to 48.2% in the third
quarter of 48.2 (Razali et al. 2018 ). The rationale for rise in the property price in Malaysia is
mainly evident because of rise in the constructio n materials by 20% which led to a furthe r
increase in the house price by 10% (Rachmawati et al. 2019 ; Yap and Ng 2018 ). On a Simila r
note, the Ave rage home prices in China is seen to increase by 0.1% since January 2021 in more
than 70 major cities. Along with this, the product market increased as a result of considera tio n
of heavily -indebted players in market such as China Evergrande Group . Moreover , the avera ge
prices of new housing in four largest cities namely Shenzhe n , Guangzho u and Shanghai also
increased by 0.6% in January 2021 (Chari et al. 2021 ). In addition to this, on an average the
home prices in China are seen to further increase by 1.5% on a year on year from March 2022.
The minima l rise in the property price can be seen to be evident in form of increase in the
property prices amidst COVID -19 pandemic (Zhang Qiao and Yeh 2022 ).
On a similar note, the increase in the property price in Ja pan can be also identified with
an increase of 6.9% during the Q3 2021. This is further seen to be evident with yoy increase of
2.4% in 2017, 2.1% in 2018, 0.5% in 2019 and 3% in 2020 (Law 2021 ). The factors drivin g
the property prices in Japan can be further identified in form of 3.4% yoy as on Feb 2021. This
is referred with a 3.8% increase in comparison to the previous month. Similarly , the yoy growth
can be identified with a growth rate of 1.3% . Moreover, as on 2021, the land prices increase d
on an average by 0.6% in 2021 from 0.5% in 2020 (Suzuki et al. 2022 ).
The purpose of this research is to investigate the rise in the real estate price on a consta nt
basis. In this regard, some of the main excerpts of the research relates to answering the rele va nt
question of increase in the overall price in the property from 2019 -2022 in China, Japan and
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ARE REAL ESTATE PRICES CONSTANTLY ON THE RISE IN THE WORLD?
Malaysia. It is worth noting that the research has considered increase in the property price s
particularl y in the rising world. The main aim of the study aims to answer the relevant questio n
of the rationale for such an increase in the property price. The motive of conducting the stud y
can be directly identified with knowing the factors which affected the pro perty prices in the
selected countries. Therefore , the main rationale of conducting the study is seen with
identifying the different types of the macro -economic factors which has influe nced the price s
of the property as the country tried to recover from th e COVID hit situatio n.
Re se arch Scope
The direct scope of the research can be seen in form of knowing about the changes in
real estate prices in Malaysia, Japan and China. In this aspect, the research scope has dire c tly
identified several macro -economic f actors impacting the property prices in the aforementio ne d
countries. The scope of the research has also considered various external and unforeseen facto rs
such as COVID – 19 pandemic.
Re se arch Obje ctive
ï‚· To know about the macro -economic factors impacting the rise in real estate prices in
Malaysia
ï‚· To know about the macro -economic factors impacting the rise in real estate prices in
China
ï‚· To know about the macro -economic factors impacting the rise in real estate prices in
Japan
Re se arch Que stion
ï‚· What are the main macro -economic factors impacting the rise in real estate prices in
Malaysia?
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ARE REAL ESTATE PRICES CONSTANTLY ON THE RISE IN THE WORLD?
ï‚· What are the main macroeconomic factors impacting the rise in real estate prices in
China?
ï‚· What are the main macroeconomic factors impacting the rise in real estate prices in
Japan?
Lite rature Re vie w
Incre ase in prope rty price in M alaysia
As per the review existing literature, we are able to identify how there has been a
constant increase in the prices of the property in Malaysia due to the attributes such as
population demand and supply, housing price as per the location, neighbourhood, physic a l
characteris tic s, accessibility, developer, cost of materia l and land and income. In this manne r,
we are directly able to identify how the re has been several changes in the prices. Based on the
literature of populatio n demand and supply, the increase in the income and populatio n ma y
significa ntly influe nce the housing demand (Aris 2018; Pinjama n and Kogid 2020) . The
relevant changes in the quantity in the housing demand has been further considered with
significa nt changes associated with income growth, household format io n rate and popula tio n
growth. Therefore, the overall trend in the housing price is depicted with an increasing trend .
Furthermore, the pertinent changes in the housing demand may also impact the housing sup p ly
which further affect the prices of the houses. As a result of the investiga te d population increa s e
from 1.66m from 2013f to of 1.75 millio n in 2020f, the price of the household is also depicte d
to rise to a considerable level (Dwaikat and Ali 2018 ).
The housi ng price based on location is seen to change with availab ility of the
development projects and location of the projects in form of the accessibility of the facilit ie s
such as schools, healthcare, child care facilitie s and other social facilities . Based on the loca tio n
facilities, the annual percentage growth in the household is investiga te d to grow significa n t ly .
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ARE REAL ESTATE PRICES CONSTANTLY ON THE RISE IN THE WORLD?
As per the neighbo urhood factor, the housing price in Malaysia is seen to depend on rele va nt
form of the factors such as environme nt and neighbourhood characteristics (Hanafi et al. 2018) .
Moreover, as a result of the depiction of the house being in good neighbo urhood, the
environme nt quality characteristic s along with availab ility of green space area has been seen
to have a considerable impact the prices of the property in Malaysia. Similarly, the physic a l
characteristic s may also influe nce the price of the houses as a result of presence of any specia l
design (Kiong and Aralas 2019 ). The common form of structural attribute pertaining to the
property is seen with size of the living areas and built -up areas. The accessibility of such as
easing the reach of the services, destinatio ns and ease of reaching goods may further affect the
prope rty prices in Malaysia in considerable manner. In addition to this, the experts of the
relevant literature have further revealed that one of the main reasons of surging property price s
in Malaysia is also due to Government cutting down on the premiums of t he construc tio n
developers through which the constructio n cost is able to be reduced to a great extent. Howeve r,
the developer needs to in turn pay higher premiums on the constructio n which is the n
transferred to the buyers of the house (Trofimo v and CD Xu an 2018 ).
The cost of the materia l and land is responsible for driving the property price to an
extent of 3 – 5% . Furthermore, the transportation also increases the prices of the property in
Malaysia by 10 -20%. The formulatio n of the relevant relationship between the income and
house price has increased the prices of the property to a tune of CAGR 8.1% (Razali et al.
2018 ). As per the role of the Government, the fulfilme nt of the housing is seen as a majo r
objective pertaining to the nationa l development. This has been focused as the main action as
a result of the increasing housing pric es (Rachmawati et al . 2019 ).
Incre ase in prope rty price in China
The present literature has focused on accommodating monetary policy during the
financ ia l crisis associated with the risks related to the property bubble associated with infla t in g
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ARE REAL ESTATE PRICES CONSTANTLY ON THE RISE IN THE WORLD?
the price of the property. As a result of the ea rly evidence of the literature we are further able
to identify that the dramatic increase in the housing prices in China came up with severa l
questions on housing bubble of China especially related to affordability price -to-rent and price –
to-income ratio (Orlik 2020) . Moreover, the signific a nt rise in the consumptio n patter n is also
responsible for increasing the prices of the property (Wen et al. 2018 ). It is also worth no ting
how interna l the impact of overall property prices is seen to be largely dependent on financ ia l
system of differe nt share of well pertaining to the households. In this aspect, the property pric e
index of China significa ntly increased in nomina l terms. Therefore, the result of deflated CPI
infla tio n and prices of real estate, th e consumptio n significa ntly increased as on 2020 (Gua n
and Peiser 2018) .
As a result of such an increase in the consumptio n, the property price in both Beijin g
and Shangha i followed an increasing trend. Some of the existing literature review referring to
the past trend of increasing property price in China and related with interesting case of
Hangzho u which is the capital of Zhejiang Province (Versal, Balytska and Erastov 2021) . It is
worth noting how in 2015 in Hangzho u the property prices increased as a result of housin g
reform in 1998 . Moreover, the existing literature suggests how in China direct impact of
increasing property prices can be also seen in form of constructio n of rail transit. In this regard ,
the rail transit is conducive for facilita ting s uperior means of alternative transportatio n, there b y
reducing the overall traffic pressure. However, as a result of increased accessibility the nearb y
property prices significa ntly inflate s. Traditio na lly, prior studies have used property marke t
data to bu ild hedonistic price models for empirica l study. In theory, a property may be
considered of as a heterogeneous good, with its price determined by a number of distinc t
characteristic s such as location, neighbo urhood, and structure. As a key extrinsic amenit y,
metropolita n rail transit plays an important role in property buyers’ decision -mak ing process
(Wen et al. 2018 ; Quinn and Turner 2021) .
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ARE REAL ESTATE PRICES CONSTANTLY ON THE RISE IN THE WORLD?
The advantages of transport facilities and services are, of course, reflected in ho me
prices. Benjamin and Sirmans investigated railway in Washingto n, D.C., and discovered tha t
every 0.1 mile nearer to the nearest station increased the rental value of an apartment by 2.5
percent. As per Hess and Almeida, each foot of length decreased leads in a $2.31 rise in ho me
valu e. Typically, ease of access is measured by the straight -line range between the estate and
the rail transit station. These investiga tio ns directly applied the distance variable into
investigate d models to produce price elasticity, quasi, or margina l price for traffic access, and
then analysed the rail transit’s average capitalizatio n impact. In most circumsta nces, this
method will suffice to meet the requirements of the research (Li, Wang and Liu 2022 ).
Incre ase in prope rty price in Japan
As per the existi ng literature, we are able to discern how the asset bubbles have forme d
a unique combinatio n of psychologic a l factors for differe nt economic and cultura l
developments. In this aspect, it is worth noting how for a long time, there have been no large
financ i a l firm bankruptcy in Japan, and such instances of property price increase were kept
low. However, it is worth noting how in 2009 itself, the country experienced a sudden rise in
the prices of the property as a result of GFC impact (Versal, Balytska and Er astov 2021; Wo lf
and Takeuchi 2022) . Due to such an effect, the average price of its regions but into the house s
situated in Xihu District was seen to undergo a considerable rise in experienc ing highe st
average of property prices. moreover, the investiga ti o n of further increase in property prices in
Japan can be further identified with the funding considered as are the safe haven for individ ua ls
with higher average consumer spending. Due to such phenomena, the overall property price s
are always considered t o be on the higher side (Charoenwong, Morck and Wiwattanakan ta n g
2019 ). Moreover, the market attractiveness is ensured by following stable economic and
politica l fundame nta ls. However, in the recent times these factors have been seen to be
disrupted as a result of social disruptio n and COVID -19 pandemic around the globe. The
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ARE REAL ESTATE PRICES CONSTANTLY ON THE RISE IN THE WORLD?
governme nt of Japan was expected to continue to expand with real GDP reaching up to 3.2%.
Despite such predictions, the Galway and along with the shortage of conductors, the dema nd
in in the residentia l property sale increase d both in Osaka and Tokyo (Run gsk unroc h, Ya ng
and Kaewunruen 2020 ).
The relevant literature has investigated how in Tokyo the selling of total number of
existing condominiums substantia lly increased by 10.8% to 37,113 units in the first few months
of 2021 . On a similar note, in Osaka the selling of the existing condominiums substantia l ly
increased by 6% y -o-y to 15,822 units in Jan -Nov 2021 (Globalpropertyguid e.co m 2022 ). A
similar trend and was identified with increase in the land sales despite of rise in the property
price. This was mainly evident as a result of increased demand (Shima moto 2019 ). In additio n
to this, it is worth noting how the authorised starting price of housing properties reached up to
788,091 units during the first 11 months of 2021 which is again seen as an incre ase of 5.1% in
comparison to the previous year. However, despite of these reasons, historic increase in the
Omicron variant is seen as the main reason behind increasing property prices in Japan in the
recent times (Ltd. 2022 ). As a result of review of the existing literature, we are able to identify
a direct correlatio n in the increase in the property prices of Japan, China and Malaysia .
Moreover, the increase in the property price as a result of asset bubble is also a direct co rrela tio n
between Japan and China (Su et al. 2018) .
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ARE REAL ESTATE PRICES CONSTANTLY ON THE RISE IN THE WORLD?
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