IIUM Repository

What drives house price in Malaysia? In search of an alternative pricing benchmark for Islamic home financing

Kassim, Salina and Redzuan, Nur Harena and Haron, Nor Zalina (2017) What drives house price in Malaysia? In search of an alternative pricing benchmark for Islamic home financing. Planning Malaysia: Journal of the Malaysian Institute of Planners, 15 (4). pp. 21-34. ISSN 1675-6215 E-ISSN 0128-0945

[img]
Preview
PDF - Published Version
Download (561kB) | Preview
[img]
Preview
PDF (scopus)
Download (215kB) | Preview

Abstract

The current practise of the Islamic banks to rely on market interest rate as pricing benchmark for their home financing products has been a subject of intense debate among many parties. Muslim scholars have warned that it is highly discouraged as it could lead to a possible convergence between the practices of the Islamic and conventional banks. This paper intends to address the financing issues in the discussion of human settlement or housing policy by presenting the determinants for house price index as well as looking into the possibility of adopting the House Price Index (HPI) to replace the market interest rate as a pricing benchmark for the Islamic home financing. The study applies Auto-Regressive Distributed Lag (ARDL) method on a model comprising HPI as the dependent variable and a set of independent variables consisting of economic, housing demand and housing supply factors. The findings lead to the formulation of recommendations as a way forward for the Islamic banking industry in particular, and the economy in general. This will require a paradigm shift from basic financing products to a more holistic approach which integrates supply of housing factors, as well as urban planning and urban finance, with human rights and recognizes the need to place and shelter people.

Item Type: Article (Journal)
Additional Information: 4600/60132
Uncontrolled Keywords: home financing; House Price Index, Islamic banking; benchmarking; interest rates
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HG Finance
H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Institute of Islamic Banking & Finance (IIiBF)
Depositing User: Dr Salina Kassim
Date Deposited: 15 Dec 2017 11:47
Last Modified: 10 Jan 2019 16:23
URI: http://irep.iium.edu.my/id/eprint/60132

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year