Page 235 - Contributed Paper Session (CPS) - Volume 8

CPS2265 Siti Salwani Ismail et al.
outstanding loans as at end May 2017 (The Star, 2017). This study will use the
value of loan approved in five years period as one of the independent variables
to be analyse.
Customers of banks and other financial institutions borrow for a number
of reasons and their ability to pay back their loans can be attributed to a
number of factors which include lending rates at which they borrowed the
loans. High lending rates will impact on borrower’s ability to pay which also
hinder the consumer to purchase the property in the first place (Evans, 2014).
The second independent variable which will be observed in this study is the
base lending rate.
In year 2012, the Malaysia’s housing market was ranked 9th in the list of
“The World's Hottest Real Estate Markets” by a real estate consultancy Knight
Frank with 5-year price growth of 28.5 per cent (Lim Sze Yoong et al.2016).
This is achieved by the rapid increase in overall property prices, openness to
foreign investment and future growth potentials of the housing market. In
relation to it, according to MacLennan (2002), economists have characterised
housing as a bundle of attributes. Some of these attributes are derived from
the internal characteristics of the house unit itself such as the rooms available,
whilst examples of external are location, accessibility to utilities, services and
facilities. These attributes has influence in determining the house price.
According to the Valuation and Property Services Department's The
Residential Prices Quarterly Update Q2 2018, the average of all houses’ pricing
in Malaysia has continued to increase from 2010 till date. Thus, the average
house price was selected as another independent variable in this study.

3. Methodology
The purpose of this section to apply the conceptual discussion and
quantitative data econometric test of variables that effect to output of real
estate subsector. This research aims to determine the relationships that exist
between macroeconomic variables (loan approved, base lending rate and
average house price).

4. Theoretical Framework
The following theoretical frame work shows how the independent variables
which were represented by value of loan approved, base lending rate and
average house price will influence the gross output value of residential
developer.

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