How Interest Rates, Gross Domestic Product (GDP), and Inflation Shape Residential Property Investment Decision of Buyer in Klang Valley, Malaysia

DOI

10.2991/978-94-6463-994-0_30How to use a DOI?

Keywords

Property Price; Interest Rate; Inflation Rate; Investment Decision; Macro-economic Variable

Abstract

The abstract should summarize the contents of the paper in short terms, i.e. 15–250 words. Introduction / Main Objectives: Following the Asian financial crisis, Malaysia experienced a sharp rise in property prices, creating an affordability crisis that prompted various government interventions. Investment decisions in real estate are often guided by the House Price Index (HPI), which helps investors assess market conditions. This study aims to examine how macroeconomic factors influence real estate investment decisions and analyze the effects of GDP, interest rates, and inflation on housing prices. Background/Problem Statement: The Malaysian Property Market Report 2023 highlights persistent challenges, including declining transactions, low office occupancy rates, and a surge in unsold homes. By the end of 2024, nearly two-thirds of newly launched residential properties over 100,000 units remained unsold. Rising living costs have weakened Malaysians’ purchasing power, worsening affordability and slowing consumer spending. Novelty/Research Contribution: This study provides new empirical evidence on how macroeconomic conditions shape housing price movements and investor behavior in Malaysia, offering insights for policy makers and investors. Research Methods: Secondary data from NAPIC, DOSM, and financial reports were analyzed using quarterly data from 2013–2023. Regression analysis in SPSS and Excel measured relationships through R, R², p values, and F-tests. Findings/Results: Results indicate that residential property price growth is significantly influenced by GDP, interest rates, and inflation, confirming that macroeconomic factors play a major role in real estate performance. Conclusion: To improve affordability, the Malaysian government promotes affordable housing projects, discourages speculation, and facilitates easier loan access while supporting long-term market recovery.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Nor Izzati Mohd Aziz
AU  - Jagathish Ananthan
AU  - Salina Kassim
PY  - 2026
DA  - 2026/02/23
TI  - How Interest Rates, Gross Domestic Product (GDP), and Inflation Shape Residential Property Investment Decision of Buyer in Klang Valley, Malaysia
BT  - Proceedings of the 24th Malaysia-Indonesia International Conference on Economics, Management, and Accounting (The 24th MIICEMA) in conjunction with The 9th Sriwijaya Economics, Accounting, and Business Conference (The 9th SEABC) (MIICEMA-SEABC 2025)
PB  - Atlantis Press
SP  - 442
EP  - 454
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-994-0_30
DO  - 10.2991/978-94-6463-994-0_30
ID  - Aziz2026
ER  -