DEBUNKING THE UNAFFORDABLE HOUSES IN MALAYSIA FROM THE TRANSACTION COST ECONOMICS PERSPECTIVES: A PRELIMINARY STUDY

Abstract

There has been debates over whether housing improvement should be recognised as one of the characteristics to measure economic development of a country. This is due to the fact that a house also known as shelter, despite being one of the important physiological needs, is still a wishful thinking as many people still struggle to own a house. Bank Negara Malaysia’s data in 2019 reported that the housing median multiple affordability score is 4.8, indicating the house prices in Malaysia is seriously unaffordable. Previous research postulate that the needs to fulfil government’s policies is one the key factors that increases the housing prices. Interestingly, a research proposed a strategy to apprehend unaffordable housing through transaction costs analysis. Transaction costs are the costs incurred from the transaction activities in the construction industry, however the said cost is not consistently and clearly defined due to low acceptance and familiarity in the construction industry. Hence, this paper aims to debunk the aforementioned issues from the transaction cost economics (TCE)’s perspective. TCE is a theory that provides a platform to allow parties to distinguish the invisible costs from transaction of activities. TCE theory will be investigated in Malaysian housing development, as unbundling TCE in housing development will provides economic transaction efficiencies and able to identify and quantify transactions that can either be removed or improved to lower the transaction costs and subsequently debunking the unaffordable housing issues in Malaysia due to the high housing prices in Malaysia. To support the limitation of TCE, integrating it with other complimenting will help to get a better insight and understanding of TCE in housing development.