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0 CHAPTER THREE: RESEARCH METHOLOGY

1.1 INTRODUCTION

2.0 In this section, research methodology will discuss clearly researchers research plan.

This chapter will explain in detail the sources of data and the formula used in order to

gain the result. All the methods used to gain understanding and answers to the research

objectives and research hypotheses.

3.0 This section discusses the methods that will e used in this study. The scope that will be

discussed including the data collection method and data analysis. This study examines

the affect between the factors of lending interest rate, GDP and inflation rate with

housing price index.

3.1 DATA COLLECTION

Data collection involves the process of gathering information and data either from

primary or secondary data. In this study only secondary data is used.

3.1.1 Secondary Data

Secondary data refers to the statistical material which is obtained from someone

else records. Secondary data helped researchers understanding so as to define

problem, formulate research design and interpret the results. This type of data is

generally taken from sources like magazines, newspapers, reports, journals,

bulletins etc.
 This research paper concentrate on secondary data obtained from one source. The

reason for using secondary data from the same source is that it is more reliable

compared to obtaining quality data from different sources and also it saves time in

data collection. This paper utilizes time-series data. The sample of this study

comprises of 56 observations each of the independent and dependent variables on a

quarterly basis over a 14 year period from 2000 to 2013. The time-series data used

are from 2000 to 2013 for all the independent variables which are gross domestic

product, lending interest rate, and inflation rate and also the dependent variable

that is housing price index. For easy reference, Table 1 below illustrates the Data

Sources.

Variables Proxy Explanation Units Source of Data

House Price Index HPI It is an percent change that 1-Year % The Malaysian
show the price of change
Change House Price
residential housing
Index
Lending Interest Rate IR Short term interest rate. 3 Per cent Trading
months Treasury Bills
(%) Economics
Gross Domestic GDP The national income through 1-Year % World Bank
the market value of goods
Product Change Group
and services in a country

Inflation Rate sustained increase in the 1-Year % Departments of

general price level of goods Statistic
and services in an economy Change Malaysia.
over a period of time

Table 1: Data Sources

3.2 VARIABLES

A variable is anything that can take on differing or varying values. The values can differ

at various times for the same objects or person. The variables consist of dependent and

independent.

3.2.1 Dependent Variable

The dependent variable is denoted as variable of primary interest to the researcher

as it provides a measurement of the effect of the independent variables. In this

research, volatility of housing price is the designated dependent variable where it

indicates the outcome of the change brought about by changes in the independent

variables.

3.2.2 Independent variables

Independent variables (predictor variables) are the ones that influence the

dependent variable and they explain the variance in dependent variable. In this

research, gross domestic product (GDP), lending interest rate (IR) and inflation

rate are the independent variables that were used to find the cause factors between

dependent and independent variables in order to get the final result of this

research.

3.3 RESEARCH DESIGN

Research design involves a series of rational decision making choices with issues relating

to decision regarding the purpose of the study, the types of investigation, the extent of
researcher interference, the study setting, unit of analysis and the time horizon of the

study (Veera Pandiyan & V.G.R Chandran, 2011). This study engages in the hypotheses

testing of the factors that influence housing price in Malaysia.

3.3.1 Purpose of the Study

Research serves many purposes. Three of the most common and useful purposes

are exploration, description and causal/ hypothesis testing. Many studies can and

often have more than one of these purposes but each has different implications for

other aspects of research design. The purpose of this study is explanatory to

analyze the cause factors of the gross domestic product, lending interest rate and

inflation rate that influence the volatility of housing price.

3.3.2 Types of Investigation

Basically, there are three types of investigation which are clarification,

correlational and causal. In the first type that is clarification investigation, the

purpose is to obtain a better comprehension of the concepts involved in the

research problem. A correlational relationship is where two or more concepts or

variables move simultaneously. In this research study however, the type of 56

investigation falls under causal investigation. Here it shows the effect of one

concept or variables can cause a change or movement in another concept or

variables.
 3.3.3 Research Interference

Researcher interference involves the extent of interference by the researcher on the

variables under study which has a direct bearing on the research decision.

However, as this research is hypotheses testing based on observations of past data

of the dependent variables and its variables factors to the volatility of housing

price, there is minimal or no interference at all by the researcher. This research

aims to identify the variables factors between the dependent variables and its to

the volatility of housing price by using causal investigation technique.

3.3.4 Study Setting

4.0 As the research study is based on secondary data obtained from World Bank Data,

Trading Economics, Malaysian Housing Price Index and Departments of Statistic

Malaysia, the study is carried out on a non-contrived setting that is in the n atural

environment where work proceeds normally.

3.3.5 Unit of Analysis

The unit of analysis refers to the level of aggregation of the data collected during

the subsequent data analysis stage. The research objective determines the unit of

analysis. The characteristic of these level of analyses is that the lower levels are

subsumed within the higher levels. It is necessary to decide on the unit of analysis

even as we formulate the research question, since the data collection methods,

sample size and even the variables included in the framework may sometimes be

determined or guided by the level at which data are aggregate for analysis. There

are five units of analysis which are individuals, dyads, groups, organization and

countries.
 For this type of research, the unit of analysis is individual. Individual represent by

all households that would affect by the variables factors towards the price of

housing in Malaysia.

3.3.6 Time Horizon

This research will be using the longitudinal studies. It is a study over a longer

period of time in order to meet the research objective. The research concentrates on

the effect of the independent variables towards volatility of housing price. This

research used quarterly data range from year 2000 to 2013.

3.4 RESEARCH FRAMEWORK

Research framework is developed to better understand about the effects of independent

variables factors on the housing price. This framework is shown as in figure 1 below.

GROSS DOMESTIC
PRODUCT (GDP)

LENDING INTEREST THE PRICE OF HOUSING IN

RATE (IR) MALAYSIA

INFLATION RATE

Figure0 1: Framework of factors affecting the price of housing in Malaysia.