Exploring housing supply dynamics and temporal modelling of residential construction activities
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 22 August 2024
Abstract
Purpose
This study aims to develop a modelling framework of housing supply dynamics within the context of urban microsimulation systems. Housing markets have witnessed substantial investigation over recent decades, predominantly concerning residential demand. However, comparatively limited attention has been directed towards comprehending the housing supply dynamics. Housing policy disconnects with the developers’ market behaviours, which leads to significant mismatch between the housing construction and affordable housing needs of the population. Research attention should be made in comprehending the residential construction market activities. To address this gap, this study developed an autoregressive distributed lag (ARDL) model and analyzed the temporal evolution of housing construction.
Design/methodology/approach
An ARDL model was developed to address the issue of temporal modelling of the housing supply. An empirical study was conducted in the Greater Toronto and Hamilton Area (GTHA) based on a longitudinal housing starts data set from 1998 to 2020. The model integrates diverse variables, including macroeconomic conditions, property development costs, dwelling prices and opportunity costs. Notably, the model captures both the path-dependent effects stemming from supply market fluctuations and the temporal lag effect of influential factors.
Findings
The findings reveal that the supply-side’s responsiveness to market condition alterations may span up to 18 months. The model has reasonable and satisfying performance in fitting the observed starts. The methodological foundations laid will facilitate future modelling of housing supply dynamics.
Originality/value
This study innovatively separated the modelling of housing supply within the context of urban microsimulation, into two parts, the modelling of housing starts and completion. The housing starts are determined in a complex and regressive process influenced by both the micro-economic environment and the construction cost and housing market trends. Through the temporal modelling method, this study captures how long it would take for the housing supply to respond to multiple factors and provides insight for urban planners in regulating the housing market and leveraging various policies to influence the housing supply.
Keywords
Acknowledgements
Ethical approval: Not applicable.
Competing interests: The authors declare that there are no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
Funding: The study is funded by the University of Toronto Faculty of Applied Science & Engineering Dean’s Strategic Fund project DSF20-44, “Urban Modelling Collaboratory: A Mobility Network Initiative”.
Availability of data and materials: Some data and models that support the findings of this study are available from the corresponding author upon reasonable request. Some data used during the study are proprietary or confidential in nature and may only be provided with restrictions.
Citation
Zhang, Y. and Miller, E.J. (2024), "Exploring housing supply dynamics and temporal modelling of residential construction activities", International Journal of Housing Markets and Analysis, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJHMA-04-2024-0049
Publisher
:Emerald Publishing Limited
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