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CHAPTER 1: INTRODUCTION Overview The contents of this chapter discussed on the background of the company, introduction, problem statement, hypotheses, theoratical framework, objective of the study, significant of the study and some issues related to the study. Under issue of the study, total amount of housing loans will be discussed because it is proxy of this study. 1.0 Background of study Housing loan means product that offers by the financial institution such as banks, government society, and so on. For a housing loan to be approved, it takes many factors to be considered by the financial institution. For example, income. This study will consider the track record data from previous 9 years data on housing loan that have been made. Then, using those track record the researcher will know the history of the total housing loan that have been approved past relative years in term of amount. Generally, house is a building or structures that individuals and their family may live. Different housing situations vary for individuals and may depend on age, family, and geographic location. For example, a recent

university graduate in an urban environment in the US may live in a rented apartment whereas a middle-aged entrepreneur may live in

a house with or without a mortgage. Another definition is anything that covers, protects, or supports another thing. For example, the casing of a desktop computer is its housing component and can be made

of multiple materials to protect the internal components.

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Loan, is an arrangement in which a lender gives money or property to

a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future point in time. Usually, there is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the borrower may not repay a loan (though modern capitals have developed many ways of managing this risk). Thus, housing loan can be defined simply as an arrangement to buy/possessing house for living, and etc. Generally, a person decides to buy a house based on many factors. One of those factors is emotional contagion. Another factors usually are based on the income that they earn, loan interest rate, and etc. Loan interest rate as we can see is much related with global inflation. Inflation is a rise in general price of goods and services in an economy over a period of time. Thus inflation might help in the process of compromising this study. Unemployment means people are without jobs and they have actively looked for a work within the past four weeks, as defined by the International Labour Organization. Person who was not employed will affect their income. Thus, will affect the demand of goods and products and from that it will reflect the inflation rate. By that, unemployment might help in providing better findings towards this study.

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1.1 History of the company DMS Majujaya Enterprise was established in the early 2008. The core business of this company is accommodation. It was started with hotel named Ombak Inn. Ombak Inn was build in early 2008 and began operations in November 2008. Ombak Inn is a budget hotel accommodation that target middle and high income customer. Ombak Inn is owned by DMS Majujaya Enterprise address at Lot 601 A Lorong Gayong, Jalan Pengkalan Chepa, Kota Bharu Kelantan. At the and of 2009, Ombak Inn has developed the idea of opening a boarding house with the concept of One stop in the condominium Pelangi Mall and called Ombak Pelangi Guest House. To further improve market demand for accommodation, Ombak Inn has introduced a new concept of Home stay. Privileges Ombak Village, where tourists can rent a guest house (home stay) or a room alone with the concept of one stop. Although guest rooms, but they can use the existing space as the kitchen, yard and living room as well as the concept of home stay. Other than that, DMS Majujaya Enterprise also involve in construction activities, renovation and so on. The company owned land property around the state of Kelantan. So, the company can build house and sell their land property including the house. Usually, the owner and also the manager working outstation in order to meet home client. For the past 2 years, DMS Majujaya involve in home construction around Pasir Puteh, Rantau Panjang, Pengkalan Chepa, Pasir Mas, and Rantau Panjang Kelantan. Nowadays, DMS Majujaya starting to proceed their house project at bandar baru Pasir Mas.

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1.2 Problem statement Based on the previous studies on any topic that related with housing loan seems does not provide specific research on how will the total of housing loan will be affected regarding on current economic situation and so on. Researcher is interested to find out on how usually total amount of housing loan will be affected in a year time. Total housing loan that have been made past 10 and above years were change rapidly. But how housing loan will be affected? For sure for someone who have complete requirement to apply home loan will get the approval for their home loan application. But will the same person apply for another home loan while he/she already have one? Does it is because the nature of a growing economic will affect directly with the total of housing loan? If it was a nature, can we explain what was happened on U.S. Subprime Mortgage on 2008? Now what have the researcher found here is, a person does not buy a house only for living. They are seeking for something else like profit. When someone buys a house, it means he/she will apply for home loan. The applicant must be someone that truly expert in making profit from any changes in this world. That is why Im interested to find out more particular on factors that probably have direct relation with home loan. Furthermore, house is a property that we do not buy like a cheese, car and etc. We will use house for more than 10 years above or some period else. Assume that we are standing as the construction company, how will we gain more profit for selling house? This statement will further the study on how will inflation, unemployment, and GDP growth will affect amount of total housing loan in Malaysia.

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1.3 Hypothesis The hypothesis is given to predict what will happen in the result, at the end of the study. In this study, null and alternate hypotheses will be use. In general, the null statement is expressed as no (significant) relationship between two variables or no (significant) difference between two groups. The alternate hypothesis, which is the opposite of the null, is a statement expressing a relationship between two variables or indicating differences between groups. 1.3.1 H0 Inflation = There are no significant relationship between total housing loan

versus inflation. H1 = There are significant relationship between total housing loan versus

inflation. 1.3.2 H0 Unemployment = There are no significant relationship between total housing loan

versus unemployment. H1 = There are significant relationship between total housing loan versus

unemployment. 1.3.3 H0 GDP growth = There are no significant relationship between total housing loan

versus GDP growth. H1 = There are significant relationship between total housing loan versus

GDP growth.

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1.4 Theoretical framework

A theoretical framework is a conceptual model on how theorizes or makes a logical sense of the relationships among the several factors that have been identified as important to the problem (Uma Sekaran). The relationship between dependent and independent variables are presented in model. Model of theoretical framework are presented below.

inflation

Housing loan

unemployment

GDP

A variable is anything that can take on differing or varying values. The dependent variable is the variable of primary interest to the researcher. In this study, the dependent variable is housing loan. An independent variable is one that influences the dependent variable in either a positive or negative way. That is, when the independent variable is present, the dependent variable is also present. In other words, the variance in the independent variable is accounted for by the independent variable. In this study, inflation, unemployment, GDP was considered as independent variables.

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1.5 Objective of the study 1.5.1 General objective To determine whether factors such as inflation, unemployment, GDP will give an impact on housing loan. 1.5.2 Specific objective 1) To find out if there is correlation between inflation and housing loan. 2) To find out if there is correlation between unemployment and housing loan. 3) To find out if there is correlation between GDP and housing loan.

1.6

Research question This study hopefully will provide answer for those questions: 1) How will inflation influence amount housing loan that will be made in a year. 2) How will unemployment influence amount housing loan that will be made in a year. 3) How will GDP influence amount housing loan that will be made in a year.

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1.7 Significant of the study 1.7.1 For the Company This study might have been done by others researcher previously, but this study will be different. The reason is this study will particularly provide finding on the overall area in Malaysia. This company surely will make expenses on their promotion activities for house. Regarding to that point, this study will help the company to understand what the best they need to do for their expenses on house promotion. In simple words, if they know the prediction on this year housing loan will be higher than the previous year, they should reserves more budgets in promotion to grab the profit opportunity. Other than that, this study might provide help the company to develop business plan in order to adapt with changing economic environment. Besides that, this study will improve researcher knowledge on housing loan and the factor that need to be consider on why the total amount of housing loan increased or decreased.

1.7.2 Research Based on the researcher observation, theres something that can help any parties that usually have relationship with real estate in term of general prediction. In other words, with knowledge from this study perhaps, those parties are able to predict what will happen in housing sector. Hopefully it will be like that. Other than that, this study might help the federal government to administer their budget presentation/plan in this sector (real estate). Furthermore it will help Constructions Company to plan against any threats that they will face in a year.

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CHAPTER 2: LITERATURE REVIEW

2.1

Literature review 2.1.1 According to Abdul Razak Abdul Aziz on his study, Locational and International Malaysian Housing Developers, based on Crosthwerite(1998) and Frost&Zhou(2000), market growth and GDP will pull the demand of housing loan for those growth period. For instance, according to Le Ma and Chumlu Liu The Decomposition of Housing Market Variation, based on fundamental model they found that GDP has relations with house price. This will lead to the demand and then goes to the contribution of housing loan amount of the year. According to Le Ma and Chumlu liu study, housing market variations are also driven by inflation rates, GDP, mortgage rates, and income.

2.1.2 From the article Market Rate Insight (2009 copyright), based on Dr Dan Geller, founds that average interest rate does not have any change if there is no major change in inflation rate, but if unemployment rate change even by minor change, average interest rate will change, Dr Dan Geller(Impact of unemployment rate on deposit rate).

2.1.3 According to Matthew Oluwole,Housing development finance through cooperative societies, based on UNCHS,1990; Abdullah,1994;Ogu,2001, low income earners cannot afford such houses developed through government intervention and even when they are subsidized.

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2.1.4 A study by W. Adrian Risso and Edgar J. Sanchez Carrera (2009) says that the effect of inflation on economic growth continues to be an important and complex topic in economics. If inflation has real economic effects, then governments can influence economic performance through monetary policy. Therefore, investigating how inflation affects economic growth pertains directly to the optimal design of monetary policy. When the inflation happen, the value of money will decrease where the citizens should pay more for something that is cheaper during deflation period. So, when inflation is high the number of withdrawal will increase because citizens need to pay the high price for anything. Automatically the saving will be decrease during the inflation.

2.1.5 Sock-Young Phang was studying if housing price setting is based on income ratio. According to the research Affordable home ownership policy, based on Shiller (2003), problems on interest rate fluactuation

(Atterhog,2005) among low income earner and high income earner are differ. Words that need to be underline here is low versus high income earner because it shows that there is a relationship among housing loan and unemployment. The reason is across country, per capita income are differ, from the study, it shows that interest rate for high per capita income country have lower interest than low per capita income. This situation will lead to the demand for housing loan as a whole.

2.1.6 According to Asyraf Wajdi Dusiki, The role of Islamic banking in Microfinance Inititives, based on Diamond(1991), the basis of trust depends on two critical elements firstly is the applicants reputation as a person of honour. Second is the availability of enough capital or collateral against which 10

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claims can be made in case of default based on Holmstrom&Tirole(1993). Regarding on this, we can see that theres must be some link between unemployment and perhaps inflation rate against total housing loans. It is due to the reputation of applicant and also availability of capital that have been mentioned by Diamond(1991) & Holmstrom&Tirole(1993).

2.1.7 According to Asyraf Wajid Dusiki, The role of Islamic banking in Microfinance initiatives, based on Adam&Vogel (1986) and Sinclaire (1998), most formal intermediaries are too poor to save, thus further accentuates the risk of supplying credits to them. From this, it shows that credit term was proven affected parallel with the unemployment, GDP, and inflation.

2.1.8 The housing finance revolution written by Richards K. Green & Susan M. Watcher, based on (Diamond and Lea, 1992). Housing finance in United Kingdom in the early 1980s was largely funded by buildings societies that charges below-market interest rates. With lenders cooperating to set below-market rates on loan, the mortgage market was shielded from macroeconomic fluctuations, thus making them become unresponsive to market rate changes. Regarding to the paper, researcher got a proof about the relationship between economic, loan rate, and house.

2.1.9 New indexes of coincident and leading economic indicators written by James H. Stock and Mark W. Watson make a research on how will be economic indicator produced and be the best useful and reliable indexes as economic indicator. Time series data are selected to be used in their research. CEI (coincident economic indicators), LEI (leading economic

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indicators), and recession index, are the result from their time series econometric method. It shows econometric method can be very useful to help in this research.

2.1.10 Relationship between the mortgage instrument, the demand for housing, and mortgage credit written by J. Kearl, K. Rosen, C. Swan from the Massachusetts Institute of Technology Cambridge (1974). The study is about how inflationary factor will affect the demand of housing and mortgage credit. That mean, researcher variable which is inflation could be significant in this study.

2.2

Definition of term 2.2.1 Inflation. Inflation is a rise in general price of goods and services in an economy over a period of time. Inflation also reflects erosion in the purchasing power of money (a loss of real value in the internal medium of exchange and unit of account in the economy).

2.2.2 Unemployment. Unemployment is an economic condition marked by the fact that individuals actively seeking jobs remain unemployed. Unemployment is expressed as a percentage of the total available of the total work force. The level of unemployment varies with the economic conditions and other circumstances.

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2.2.3 Gross Domestic product (GDP). GDP refers to the market value of all goods and services produced within a country in a given period. It is often considered an indicator of a countrys standard of living.

2.2.4 Linear regression. It is an approach to modelling the relationship between a scalar variable Y and one or more variables denoted as X. In this study, result will be gathered after the data has been key in the SPSS system in the form of chart. Then the researcher will know the relationship between the variables.

2.2.5 Regression analysis. Regression analysis includes any techniques for modelling and analyzing several variables which is the dependent variable and independent variable.

2.2.6 Error. Error means the different between the observed values of a quantity and that which is taken or computed to be the true value.

2.2.7 Econometric method. Econometric method means the application of mathematic and statistical method to the analysis of economic data.

2.2.8 Economic data. Economic data are commonly numerical time-series data. It is a set of data covering period of time for the international economy.

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Conclusion

According from the above literature review, researcher founds that this study can be proceed. It is because it shows that before this, study have been made about total housing loan. The different is only on the variables that being used. This study uses inflation, Unemployment, and GDP as the variables. From the previous research, it may use this variable too, but not all the same. Thats why researcher decides to proceed this study. Furthermore, the researcher wants to know how those variables will affect total housing loans in Malaysian market. Based on the above journal study, researcher founds interest rate, inflation, market growth, population, reputation, loan rate, and many more have been used as the variables. Researcher decides to use only inflation, unemployment, and GDP as the variables. The research methodology on this study will be shown in the chapter three. The analysis and findings of researcher study will be shown in the chapter 4. Then, the conclusion and recommendation will be discussed in the chapter 5.

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CHAPTER 3: RESEARCH METHODOLOGY

3.1

Introduction Research will be systematic through the data or input that being gathered. In order to discover or revise facts, theories, application, and etc. Methodology is the system of methods followed by particular discipline. It means, research methodology is the basic guide in data collection and analysis phases for this research paper.

3.2

Data collection method Data collection methods are an integral part of research design. It is a systematic gathering of data for a particular purpose from various sources including, interviews, observation, existing records, and electronic devices. The process is usually preliminary to statistical analysis of the data. The information in the literature review has been gathered from the financial literature and scientific articles found at the university library and through the internet. This was in order to get the necessary theoretical grounds about classic financial theory as well as more recent study results before analyzing and discussing the empirical information. It also gives a reader a deeper picture of the difficulties that this study is built upon. In this study, data will be collected by searching information about the dependent variable and independent variables via websites and books in the library. The previous research will be taking as the literature review and make the researcher understood the field of the study first before proceeds to next stage. Other than that, data will be also collected from the data stream that 15

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provided by Uitm library. Researcher can collect data such as inflation rate, GDP rate, and unemployment rate for previous 10 years quarterly. Researcher will get all the quarterly data for inflation rate, unemployment, and GDP from the year 2000 until 2009.

Data for total housing loan is in Ringgit Malaysia (RM) and same with GDP. Other than that, data for the inflation rate and unemployment are in percentage %.

3.3

Sources of data 3.3.1 Secondary data In this study, in order to gather the information for this research, secondary data was used. Secondary data can be defined as data collected by someone other than the user. Common sources of secondary data for social science include censuses, surveys, organizational records and data collected through qualitative methodologies or qualitative research. Most research prefers this type of data because of its specific, relevant and also including current and previous data. Secondary data analysis utilizes the data that was collected by someone else in order to further a study that you are interested in completing. The data uses including the inflation rate,data on Gross Domestic Product (GDP), and unemployment.

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3.3.2 Interview Interview will be conducted through sources that will provide useful information for this project paper. Sources such as house construction company, banks, and also housing loan applicant. Responses from the sources are as follows :3.3.2.1 Housing loan applicant. This respondent says that housing loan

is easy to get usually for government employees. Many of them that working in NGO hard to get housing loan approval. Usually, in Kelantan carrier like teacher will have huge house because they are easy to get housing loan approval. Researcher has conducted this interview through 5 random people in Kelantan. 3.3.2.2 Bankers. This respondent says that requirements to get

approval for housing loan actually depends on some sort of criteria that the applicant posses. Such as income, age, income deduction, and so on. From there, banks will calculate the maximum amount that they can apply for housing loan. Then, there will compare the amount with the amount that the applicant applies. The clashes between the amount that housing loan applicant apply against amount that the bank calculates being courses the application of their housing loan are rejected. These respondents give researcher the understanding on how the bank deals with housing loan applicant. 3.3.2.3 Construction company. Information from this respondent was

not really help in this study. It is because they do not know to give opinion on those economic variables such as inflation, unemployment, and GDP towards housing loan. They says that they only know how to run their business and they only focus on any contract opportunity.

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3.4 Limitation of the study 3.4.1 Time constrain The student only able to make further studies and investigation if the project paper can be done in more time. Furthermore, the student currently in internship programmes. Thats why time to spend for completing this study will be longer. 3.4.2 Cost As well as the researcher are currently a student, researcher do not have and stable income flow every month. Cost in this research including the cost to prepare the hardcopy and the cost in fuel as the researcher own a car. 3.4.3 Information from respondent. As we can see, researcher also seek information from those selected respondent to give opinion. But, the respondent also have their own responsability because they have work. 3.5 Scope of study This study will be conduct to see the amount of total housing loan for a few years. Therefore, the study will take place in Malaysia and it has involved the data from the previous year until current year. Besides that, the study also consider the data that related to economic condition in Malaysia.

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3.6 Procedure Data Analysis 3.6.1 Statistical Pakage for Social Science(SPSS) The procedures of data analysis are done after the data collection. The data is then key in through SPSS programs in order to analyze them. Here, total amount of housing loan will be defined as the dependent variable. Then inflation rate, unemployment rate, GDP will be define as the independent variable.

3.6.2 Statistical tools. 3.6.2.1 Regression Analysis Another analytical tool to be used is regression analysis, where the variables are regressed using SPSS to establish the association between the variables involved. This technique provides a clearer picture of the relationship, thereby making the finding more conclusive. This analysis would provide a table that will shows if there are significant relationships between the dependent variable and the independent variable. The significant value must be greater than 0.5 so it means there will be useful to proceed the reaearch with another analysis.

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Regression analysis runs by the following model

Y=a +B1 X1 +B2 X2 + B3X3 +B4 X4+e

Whereby; A= constant B1=inflation B2=unemployment B3=GDP E=error

3.6.2.2 Hypotheses Testing A statistical hypothesis test is a method of making decisions using experimental data. In statistics, a result is called statistically significant if it is unlikely to have occurred by chance. The phrase "test of significance" was coined by Ronald Fisher: "Critical tests of this kind may be called tests of significance, and when such tests are available we may discover whether a second sample is or is not significantly different from the first.

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3.6.2.3 T-test T-test is used to be measure either there is a significant relationship between the dependent and independent variables. This test is conduct to know either to reject or to accept the null hypothesis by comparing the t value that has been calculated with the value in the t table. If calculated t-value table t-value, the independent variable is significant. * Calculation of T-value = estimated coefficient/standard error of coefficient. *For this study researcher use t-value from spss result and compare with t-table. *Table T-value, refer to degrees of freedom at certain confidence. In this study the researcher uses 95% confidence interval and 5% significant level. (Refer to basic econometrics book, =0.05) *Calculation degrees of freedom (df) : df = n-k-1 n= number of observation k= number of independent variable

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3.6.2.4 F-test

An F-test is any statistical test in which the test statistic has an Fdistribution under the null hypothesis. It is most often used when comparing statistical models that have been fit to a data set, in order to identify the model that best fits the population from which the data were sampled. Exact F-tests mainly arise when the models have been fit to the data using least squares. 3.6.2.5 Coefficient of determination (R2) The square of multiple R, R-square or R as it is commonly known, is the amount of variance in the dependent variable explained by changes in the independent variable. Therefore, it means that how many percent of variance in stock return can be explained by the variance in interests rate, inflation rate, exchange rate and gross domestic product. The main purpose of using the R-square is to know their size of correlation.

3.6.2.6 Coefficient of correlation The correlation coefficient indicates the strength of relationship between two variables, it gives us no idea of how much of the variance in the dependent variable will be explained when several independent variables theorized to simultaneously influence it. The correlation coefficient (R) ranges from +1.0 to -1.0. If the value of r is +1.0, there is a perfect positive linear relationship, if the value of r is -1.0; a perfect linear negative relationship is indicated. No correlation is indicated if r is equal to 0. 22

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3.6.2.7 Pearson test Pearson test are used to test whether the variables are correlate each other. It means researcher want to test if there are relationship among variables which are total housing loans with inflation, GDP, and unemployment. Other than that, researcher wants to determine whether the relationship among variables is positive of negative. If the relation is negative, it must be supported by the previous journal or study that says those variables does not have relation.

We can interpret the value of coefficient of correlation as in the table below: Table 3.6.2: Coefficient of Correlation Coefficient of Correlation R=1 0.5 < R < 1 0 < R < 0.5 R=0 - 0.05 < R < -0.05 -1 < R < - 0.05 R = -1 Interpretation Perfect positive linear correlation Strong positive linear correlation Weak positive linear correlation No linear correlation Weak negative linear correlation Strong negative linear correlation Perfect negative linear correlation

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3.7

Multicollinearity One of the assumptions in the regression analysis independent variable is not related to each other. If this assumption is not observed, then the estimated coefficient may give a distorted result of the impact of the change in the independent variables. Multicollinearity arises because if two variables are closely related. It is difficult to separate the effect that each has on the dependent variables. There are ways of detecting multicollinearity problems: If the regression result passes the F- test fails the T- test. By looking at the correlation coefficient between pairs of independent variable (as a thumb of rule, a correlation coefficient of 0.7 or more would indicate the existence of multicollinearity. Multicollinearity will introduce an upward bias to the standard error of the coefficient, hence reducing the T value and the variable to be insignificant.

3.8

Autocorrelation It is indicated by a sequential pattern as the error ( i.e. the size of the error term becomes progressively larger or smaller, or exhibits a cyclical or any other pattern with respect to the X observations meaning some other variables are changing systematically and influencing the dependent variable). An autocorrelation problem usually appears when time-series data are used. It can also arise owing to the existence of trends and cycles in economic variable, when important variables are excluded from the function or non-linearities in the data.Autocorrelation gives a downward bias to the standard error of the estimated regression coefficient (t values era exaggerated), hence the estimated coefficient are concluded to be statistically 24

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significant when in reality they are not. A standard test for identifying the presence of autocorrelation is Durbin-Watson test (it is presented

automatically in the computer printout). As a rule of thumb, a value of d=2 indicates the absence of autocorrelation. To overcome the autocorrelation problem, a researcher can include time as an additional variable to take into account trend patterns, re-estimate the regression in non-linear form or introduce lag data in the time-series.

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Chapter 4: 4.1 FINDINGS AND ANALYSIS

Introduction This chapter presents the findings of the empirical portion of this study. The findings are derived from the computer software program (SPSS Version 16.0). All test regard to this study run by researchers to answers all

hypotheses in this study. Beside that the researcher also tries to identify the relation between dependent variable and independent variable by using multiple regression models. The researcher use t-test to know whether each of independent variable has significant relationship with dependent variable. The researcher use f-test to know significant relationship among overall model.

In this chapter researcher also try to detect whether problem in multiple regression occur during estimate the relation between total housing loans and economic condition. The researcher use coefficient of correlation to detect problem of multicollinearity and durbin Watson to detect problem of autocorrelation. All finding will be interpreted so that all user of this study understand all result from the test run by researcher. Interpretation will made according to the result of regression of the data using SPSS software. In this study dependent variable is total housing loans and the independent variable are inflation, GDP (gross domestic production), and unemployment.

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4.2 Hypotesis testing 4.2.1 Multiple regression analysis Table 1

Model 1 (Constant) inflation rate gross domestic production

Unstandardized Coefficients B Std. Error -258397,204 -1181,017 2,766 21923,869 882,781 ,101

Standardized Coefficients Beta

t -11,786

Sig. ,000 ,189 ,000 ,007

-,048 ,987 ,097

-1,338 27,307 2,843

unemployment 16282,138 5728,095 rate a Dependent Variable: total housing loans

Regression analysis runs by the following model

Y = a +B1 X1 +B2 X2 + B3X3 +e

Whereby: A B1 B2 B3 E = constant = inflation rate = gross domestic production = unemployment rate = random error

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Y = -258397.204 1181.017 X1 +2.766 X2 + 16282.138X3 +e

X1= 1% increase in inflation rate, total housing loans will decrease by 1181.017. X2= 1% increase in GDP, total housing loans will increase by 2.766. X3= 1% increase in unemployment rate, total housing loans will increase by 16282.13

From the above equation, there are negative relationship between total housing loans and inflation rate but GDP and unemployment rate have positive relationships againts total housing loans.

1% increase in inflation rate means total housing loans will decrease by RM1181.017 millions as the figure is at 000 and thats mean, 1% increase in GDP, total housing loans will increase by RM2.766 millions. 1% increase in unemployment, total housing loans will increase by RM16282.138 millions.

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4.2.2 Coefficient of determination R2 Table 2 Std. Error of the Estimate 9655,1330473

Model 1

R ,979(a)

R Square ,959

Adjusted R Square ,955

Durbin-Watson 1,084

a Predictors: (Constant), unemployment rate, gross domestic production, inflation rate b Dependent Variable: total housing loans

In the correlation of determination (R) produced in the table above between independent variable (inflation rate, GDP, and unemployment rate) with dependent variable (total housing loans) the result is 0.959. Therefore 0.959 indicate that 95.90% of the variation in total housing loans is explained by a change in inflation rate, GDP, and unemployment rate. The remaining of 4.1% of the changes in total housing loans could not be explained by the regression model or perhaps can be explained by other variables.

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4.2.3 T-test T-test was perform to test the significant of each independent variable with dependent variable. Table 3 Standardized Coefficients Beta -11,786 -,048 ,987 ,097 -1,338 27,307 2,843 ,000 ,189 ,000 ,007

Model 1 (Constant)

Unstandardized Coefficients Std. Error 21923,86 -258397,204 9 -1181,017 882,781 B

Sig.

inflation rate gross domestic 2,766 ,101 production unemploym 16282,138 5728,095 ent rate a Dependent Variable: total housing loans

df

= n-k-1 = 40-3-1 = 37

T-table = 1.684

*ignore negative value when comparing t-value with t-table.

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Hypothesis 1, X1 = 1.338 < 1.684 Ho= There are no significant relationship between total housing loan versus inflation. H1= There are significant relationship between total housing loan versus inflation. Accept H0 as the t-value lower than t-table.

Hypothesis 2, X2 = 27.307 > 1.684 H0= There are no significant relationship between total housing loan versus unemployment. H1= There are significant relationship between total housing loan versus unemployment. Reject H0 as the t-value greater than t-table.

Hypothesis 3, X3= 2.843 > 1.684 H0= There are no significant relationship between total housing loan versus GDP. H1= There are significant relationship between total housing loan versus GDP. Reject H0 as the t-value greater than t-table.

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4.2.4 F-test F-test is to test the significant relationship of overall multiple regression model. Table 4

Model 1 Regression Residual Total

Sum of Squares 77789781967.746 3355977389.795 81145759357.541

df 3 36 39

F 278,154

Sig. ,000(a)

a Predictors: (Constant), unemployment rate, gross domestic production, inflation rate b Dependent Variable: total housing loans

The result of f-statistic in above table is 278.154. Refers to f-table, it is 2.84 which is lower than f-statistic. H0= No significant relationship. H1= Significant relationship. Based on decision rule, the decision rejects H0 if f-value > f-table. From the above result, H0 are rejected and H1 are accepted. Thats means, the changes in independent variable will have significant changes in dependent variable. Thats the overall model of regression equation is significant.

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4.2.5 Pearson test

Table 5 total housing unemployment loans rate inflation rate total housing loans Pearson Correlation Sig. (2-tailed) N unemployment rate Pearson Correlation Sig. (2-tailed) N inflation rate Pearson Correlation Sig. (2-tailed) N gross domestic production Pearson Correlation Sig. (2-tailed) N
**. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).

gross domestic production .973** .000 40 .029 .858 40 .342* .031

.129 .428

.283 .077 40 -.069 .671

40 .129 .428 40 .283 .077 40 .973** .000 40

40 1

40 -.069 .671 40 .029 .858 40

40 1

40 .342* .031 40

40 1

40

According to the above table, there are strong relationship between the total housing loan with GDP at significant level 0.000, according to table 3.6.2 pvalue drops at 0.5<R<1, which means those variables have strong positive linear relationship.

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4.3 Detection problems of multicollinearity 4.3.1 Problem of multicollinearity Table 6 Std. Error R Adjusted of the DurbinModel R Square R Square Estimate Watson 1 9655.1330 ,979(a) ,959 ,955 1,084 473 a Predictors: (Constant), unemployment rate, gross domestic production, inflation rate b Dependent Variable: total housing loans

Based on the above table, the result for the multiple linear regressions, coefficient of correlation (R) of the inflation, unemployment, and GDP is 0.979. Thus, the variable have strong positive linear correlation, which fall in 0.5>R>1. As a rule of thumb, a correlation coefficient of 0.7 or more would indicate the existence of multicollinearity.

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4.3.2 Problem of autocorrelations. Table 7 Std. Error of the DurbinR Estimate Watson 9655.1330 ,979(a) ,959 ,955 1,084 473 a Predictors: (Constant), unemployment rate, gross domestic production, inflation rate b Dependent Variable: total housing loans Mode l 1 R Square Adjusted R Square

Inconclusive

Inconclusive

+ve autocor No Autocorrelation

- ve autocor

dL

dU

4-dL

4-dU

dL = 1.378 dU = 1.721

4-dU = 2.622 4- dL = 2.279

dL dU 4-dU 4-dL Since the value of Durbin-Watson produced in the regression analysis is 1.39 1.60 2 2.40 2.61 1.084, which falls between 0 to 1.378, there is positive autocorrelation in the multiple regression.

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Chapter 5 CONCLUSION AND RECOMMENDATION

5.1

Conclusion As the conclusion, researcher will discuss and revise the hypothesis,

objective, and the result from the analysis. Firstly, from the findings of the multiple regression result, the overall independence variable shows that there are significant correlation between dependent variable and all the independent variable. It is shows by the R2 figures which are 0.959. Thats means 95.90% of the independent variable can be explained by the independent variable. First hypothesis which is about the relationship between total housing loan and inflation, the null hypothesis was accepted. It is because the result of t-value from the regression is lower than t-table. Then, the second hypothesis which is about the relationship between total housing loan and unemployment. The null hypothesis of this variable was rejected. It is because the t-value from the regression is greater than t-table. The third hypothesis which is about the relationship between total housing loan and GDP. The null hypothesis of this variable was rejected because the t-value from the regression is greater than t-table. According to those analysis and findings, researcher state that objective of this study were found. Which are factors that will give an impact on the total housing loan? Answer for the research question of this study can be found from the analysis chapter. Among the independent variable which are inflation, unemployment, and GDP, only unemployment and GDP has significant relationship towards the total amount of housing loan in Malaysia. But the Pearson test shows that only GDP has strong positive and high linear

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relationship with the total housing loan which is 0.973. Regarding to the result, researcher can conclude that if GDP increase, that means total housing loans will also increase. Unemployment perhaps will affect the total housing loan because from the linear regression model, positive changes in unemployment will affect positive changes in total housing loans. Thus, researcher can conclude that from this study, research question were answered but the study on this topic can be proceed by another researcher to get more precise result and findings.

5.2

Recommendation Based on this research, there is some recommendation that could be

made for the use for future. Most probably, the significant variable can be use as the indicator for any house construction company such as DMS Majujaya Enterprise in making future plan for the company. As the result which unemployment and GDP have significant relationship towards total housing loans, the company can decide whether they need to increase or decrease budget in promotion activities or not. It is because DMS Majujaya Enterprise usually performs commencing activities to promote land and house that they have. Thus, house developers perhaps can use this study for their business plan and activities. Using the variables as the indicators, they can predict what will happen in construction sector given a period of time. Other than that, goverment also perhaps can use this research for future of this country. It is because usually, government also involve in loan approval for housing loan. The government have the authority to control that.

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Thats why this study perhaps can help a little bit on goverment decision making process. It might work as references for the government and it might work as the key indicator for construction sector. Malaysian government should precise in making contribution in construction sector. Malaysian government needs to interrupt and give advise to the construction company in their business activities. Other than that, Malaysian government also can give advise to the government staff on the housing loan that they will make using this study as a little references. It is because usually government workers were easily got housing loan approval because they are from the government. That means, in Malaysia the majority of housing loan applicant would be person that working in government sector. Regarding to that, government decision will give a big impact in total housing loan in a year. Regarding to this study, future research can be made by intention to gather more precise result. The data that have been used might be not enough, accurate, and reliable. Future researcher perhaps can gather data through questionnaire which is will be more different as compare to the previous research. If not because of time constrain, this research perhaps will have questionnaire. Furthermore, data provided from questionnaire will give precise result on that market on the relations among economic variables against total housing loans. Other than that, more interviews can be done if the time given to accomplish this research is longer. Interviews can be as the special data which is hard to attain in this research. But the interview must be in one condition, the person has to be housing loan applicant. Besides that, interview with many more construction or developers company of course will help to give better findings in this study.

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Last but not least, the study on relationship between total housing loans with inflation rate, unemployment, and GDP help researcher to be more understand about what circumstances that will give huge impact on total housing loans. The study must be done with idea, effective work, and smart which is accurate. The idea on from where to gather the data, the idea on what analysis should be perform, idea on from where to gather proof that this research should be made, and so on.

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