Getting housing incentives right: A case study of the effects of regulation, taxes, and subsidies on housing supply in Malaysia

This paper examines why formal housing costs are so high in Malaysia. Two complementary analyses are presented: a microanalysis of a wide range of government interventions (taxes, subsidies, and regulations); and an aggregate analysis of housing supply behavior. The interventions analysis demonstrates that the costs of regulatory and pricing restrictions far outweigh the benefits of subsidies and regulatory exemptions. The aggregate supply model demonstrates the effects of such regulations on market prices and shows, using comparisons to the U.S., Thailand, and Korea, that countries with more stringent regulatory environments have a less elastic supply of housing.