The Impact of the Asian Financial Crisis on the Pricing of Condominiums in Malaysia

Authors: Tung-Leong Chin, K W Chau and F. F. Ng

Start Page: 33
End Page:50
Volume: 12
Issue Number:1
Year: 2004
Publication: Journal of Real Estate Literature

Abstract: This study examines that the impact of the Asian Financial Crisis on the pricing of different attributes of condominium units in Malaysia. The Asian Financial Crisis in 1997 brought about major changes in property markets in Malaysia. Amongst these changes was a more rational pricing in the market after 1997. Data were collected on condominium transactions on Penang Island before and after the Asian Financial Crisis. The analysis results suggest that the same set of housing attributes can explain a greater variation in prices after the crisis. It appears that there was more noise in the market before 1997, which may be a result of more speculative trading by noise traders when the market was booming. One of the few positive effects of the Asian Financial Crisis on the property market is the reduction of noise in the market. In addition, the demand for larger units declined more than that for smaller units. That is, units with larger floor areas suffered a much greater decline in price after the financial turmoil than did smaller units.