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Housing Price Misalignments from Fundamentals Before the 1997–98 Financial Crisis: Evidence from Malaysia

Author/s: Hui Hon-Chung

Date Published: 1/01/2008

Published in: Volume 14 - 2008 Issue 2 (pages 161 - 176)

Abstract

This paper attempts to assess the presence and extent of house price misalignments from fundamental values, with particular focus on the pre-Asian financial crisis years in Malaysia. The main findings suggest two episodes where overpricing of houses were historically large, namely 1990-92 and 1995-97. However, the magnitude of housing price misalignments before 1997 was not large enough to be considered as bubbles. As such, ‘housing price bubbles’ could not have been a contributor to Malaysia’s 1997-98 financial crisis.

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Keywords

Cointegration - Fundamental Price - House Price Misalignments

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