Do Political Institutions Affect Housing Prices in Malaysia?

This paper examines the relationship between housing price and political institutions. Political institutions is captured by elections, the role of elected government and their ramifications, and economic governance. Furthermore, the outcome of political choice on the economy is capture via economic freedom. Data ranges from 1988 to 2015. The choice of variable and time frame is highly restricted to availability of data. The effect of political institution on housing prices is examined using the ARDL bounds testing to test for both short and long run effects. Results show that elections have important effects on housing prices where prior to elections the effect is positive and negative after elections. Based on the results we recommend a strong and balance democratic regime to ensure a more stable housing prices. Strong political will is expected to curb excessive increase in housing prices in the long run.