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1 – 10 of over 42000The paper develops a housing model equation for Spain and selected regions to estimate new supply elasticity. The aim of the paper is to assess the role of housing supply on price…
Abstract
Purpose
The paper develops a housing model equation for Spain and selected regions to estimate new supply elasticity. The aim of the paper is to assess the role of housing supply on price evolution and explain the fall in housing starts since the start of the credit crunch.
Design/methodology/approach
The paper uses a pooled EGLS specification controlling for the presence of cross-section heteroskedasticity. Fixed effect estimators are calculated to capture regional heterogeneity. The model uses secondary data (quarterly) for 17 Spanish regions over the period 1990-2012. A recursive procedure is applied to estimate model parameters starting with a baseline model (1990-1999) and successively adding one-year time information. Elasticities, as well as explanatory power from models, are reported and jointly analyzed. Elasticity is interpreted as the extent to which market mechanisms drive developer responses.
Findings
Elasticities of new supply are shown to be very stable during all periods but characterized by differences in response at a regional level. Elasticity ranges from 0.8 to 1.3 across regions. The model reports a non-market-oriented mechanism that guides building decisions. The credit crunch and debt crisis have had a double negative effect capturing the cumulative effect of exogenous shocks.
Research limitations/implications
Elastic responses restrained the effects of over-pricing in the period of strong demand pressures in the early 2000s. Changes in elasticity parameters over time suggest that long-term elasticity in housing supply depends on the specific region analyzed. The results show that the credit crunch shock had varying degrees of severity in Spanish regions, dramatically reducing house-building because of the high sensitivity to changes in prices.
Practical implications
Estimated elasticity may be used to forecast responses to changes in housing prices. The results add to the understanding of the equilibrium mechanism in the housing market across regions.
Originality/value
This is the first article that analyses housing supply, calculates supply elasticities and measures the impact of the credit crunch on the housing market from the supply side in Spain. The paper adds evidence to the debate concerning the equilibrium mechanism in the housing market.
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The purpose of this paper is to use local-level time series data to examine the determinants of housing starts and the price elasticity of supply for the Aberdeen local housing…
Abstract
Purpose
The purpose of this paper is to use local-level time series data to examine the determinants of housing starts and the price elasticity of supply for the Aberdeen local housing market.
Design/methodology/approach
Seven time series models are used in the analysis. The basic model treats housing starts as a function of the changes of current and lagged house prices, interest rate and construction cost. The other six models which are extensions of the basic model include other variables like time on the market, planning constraints and future expectations.
Findings
It is found that the local variables – changes in house prices, time on the market, planning regulation, lagged stock and lagged and future housing starts – are the main factors that influence new residential construction in Aberdeen. None of the national variables is significant, confirming the importance of limiting housing market analysis to the local level. The price elasticity of supply estimated is in the range of 2.0 to 3.2 for housing starts and 0.01 to 0.02 for housing stock. These estimates are higher than most of the elasticities for the other UK local markets.
Originality/value
There is the need to better understand the supply of housing at the various local housing markets. Unfortunately, however, most housing supply studies use national data. Because national data are aggregation of local data, using national studies results for local markets may be uninformative. Also, the few existing local studies use typically cross-section data or at least time series over relatively short time spans. This paper makes an effort to use quarterly time series data over a 25-year period for a local market and also include a planning variable which is different from local markets and often ignored in national or regional studies.
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Mohamed Marzouk and Ismail Hosny
The housing sector in Egypt represents a considerable share of the gross domestic product (GDP) and accordingly the economy. Further, it is considered vital for any population…
Abstract
Purpose
The housing sector in Egypt represents a considerable share of the gross domestic product (GDP) and accordingly the economy. Further, it is considered vital for any population around the world, because it provides the shelter needed by people. Egyptian housing market is facing many problems which need to be solved. The paper aims to discuss these issues.
Design/methodology/approach
This research reviews and analyzes the Egyptian public and private housing market’s key variables. As such, it highlights the importance of informed decision making through detailed analysis and study of the market, especially when planning for the future by any housing market stakeholder. The research proposes the use of system dynamics (SD) modeling to analyze the market by creating a stock and flow model using STELLA modeling and simulation software.
Findings
The results reveal that the expected newly established families will be nearly 800,000 families in year 2015/2016. Out of these numbers, 600,000 families require economic housing units, while the expected supply is nearly 300,000 units.
Originality/value
A study is made for the economic housing market, which is a very big housing market and population segment that has been suffering from negligence for years.
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Paloma Taltavull de La Paz and Michael White
The purpose of this paper is to examine the role of monetary liquidity in house price evolution through examining the Asset (housing) Inflation channel. It identifies the main…
Abstract
Purpose
The purpose of this paper is to examine the role of monetary liquidity in house price evolution through examining the Asset (housing) Inflation channel. It identifies the main channels of transmission affecting house prices from monetary supply channels to house price change, examining how the Asset Price channel transmits changes in M1 to housing prices in Spain and the UK.
Design/methodology/approach
The paper uses Vector Auto Regression (VAR) and Error Correction models to test the Asset Inflation channel in the UK and Spain from 1991 to 2013 in two steps. In the first step, the supply elasticity is estimated through the long-term relationship between house prices and stock supply. The second step estimates a Vector Error Correction (VEC) to explain house price dynamics conditioned on supply reactions. The latter is defined as a long-term inverse demand model where housing prices are controlled by fundamentals in each market. Models allow forecast testing using Choleski impulse responses methodology.
Findings
Several results are found. In the supply model, both countries show rapid convergence to equilibrium with a larger elasticity of supply in Spain than in the UK but with a short run effect of new supply on prices in the UK. Regarding the Asset Inflation Channel model, the paper finds evidence of the existence of a housing accelerator effect in Spain, but not in the UK where changes in liquidity fully impact house prices in one direction.
Research limitations/implications
Implications of findings are mainly to forecast the effects of Monetary Policy measures in different economies.
Practical implications
The model supports the evaluation of different impacts of monetary policy in territories. It shows that the same policy will have different impacts in different housing markets and therefore highlights the importance of examining each market separately to identify the appropriate policy interventions.
Originality/value
This is the first paper that estimates the impact of the Asset Inflation Channel on house prices that endogenises housing market conditions and compares effects and interrelationships in two different economies.
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The purpose of this study is to analyze short- and long-run market-sensitive drivers of housing affordability. The study highlights an ongoing housing affordability crisis in an…
Abstract
Purpose
The purpose of this study is to analyze short- and long-run market-sensitive drivers of housing affordability. The study highlights an ongoing housing affordability crisis in an emerging market context by also providing an empirical tool to combat the crisis.
Design/methodology/approach
To investigate determinants of uniquely constructed effective housing affordability index and house price to income ratio index, the author uses a bound testing approach to cointegration and error correction models, besides causality tests, variance decompositions and impulse response functions. This study uses Turkish data for the period of 2007 M06 and 2017 M12.
Findings
The evidence suggests that the housing affordability crisis is mainly driven by credit expansion, rent and construction costs. A sensible housing policy response would target these variables. This evidence suggests that housing affordability mostly depends on housing market dynamics rather than policies because of the exogeneous/cyclical natures of the drivers.
Research limitations/implications
Data constraints shape the study. A regional or an aggregate-level panel study cannot be developed because of a lack of data. This limitation inevitably results in the exclusion of relevant socio-economic/political factors and is also the main reason for the lack of comparative analysis in a cross-country setting.
Practical implications
This study argues that dependency on neoliberal housing market practices seems the underlying reason for the lack of efficient policy answers and the ongoing affordability crisis. From a policymaking perspective, the study suggests that necessary policy measures to resolve the housing affordability crisis may give a specific emphasis on housing rent, housing credit volume and construction costs as the major components of the crisis.
Originality/value
This study develops a novel measure and presents a new conceptual framework by combining quantitative research methods and policymaking in housing affordability. In this respect, to the best of the author’s knowledge, this is the first work to comparatively investigate the determinants of uniquely developed monthly housing affordability measurements.
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Camilo Vargas Walteros, Amalia Novoa Hoyos, Albert Dario Arias Ardila and Arnold Steven Peña Ballesteros
The purpose of this paper is to provide an estimate of the demand and supply in the housing market in Colombia in a period of high real estate valuation (2005-2016). On the demand…
Abstract
Purpose
The purpose of this paper is to provide an estimate of the demand and supply in the housing market in Colombia in a period of high real estate valuation (2005-2016). On the demand side, it evaluates the impact of new housing prices, unemployment, stock market returns, real wages in the retail sector, remittances and mortgage rates. On the supply side, it estimates the influence of the price of new housing, construction costs, time deposit (TD) and mortgage rates. Real estate valuation was analyzed considering foreigners migration and land prices evolution.
Design/methodology/approach
Ordinary least squares (OLS) was used to estimate housing area with the semilog regression model and also to construct price models. OLS was also used in price models. Since quantities depend on prices and vice versa, a two-stage least squares (2SLS) was implemented.
Findings
Rising prices in new homes have an “elastic” effect on both demand and even higher effect on supply. Likewise, the real wage index for the retail sector has an elastic effect. On the other hand, the response to interest rates is negative, but statistically significant only on the supply side. Furthermore, the inflow of remittances is “inelastic” and statistically insignificant.
Originality/value
Housing can sometimes be a Giffen good, this result challenges the traditional neoclassical model, but it can be explained by investment reasons and “bubble” behavior in the housing market. One last influence is the difference between “temporary” and “permanent” migrations. The latter has a statistically significant and perfectly inelastic effect on the price of new homes.
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Guowei Gu, Lynne Michael and Yapeng Cheng
– This paper aims to explore the determinants of housing supply and the relationships between land supply and housing supply in terms of quantity and time in Shanghai, China.
Abstract
Purpose
This paper aims to explore the determinants of housing supply and the relationships between land supply and housing supply in terms of quantity and time in Shanghai, China.
Design/methodology/approach
Official statistical and property registration data[] from Shanghai are used to carry out multiple linear regression analysis.
Findings
The authors find that land supply affects housing supply with a three-year time lag. Both construction cost and housing price impact supply with a one-year time delay. The construction cost elasticities range from 0.74 to 1.51, while housing price elasticity is 2. The authors also find that plot ratio may play more important role in the developer’s first housing sale than either plot area or sales price. An average time period from obtaining the land for residential development until marketing the product is established at 36.8 months.
Research limitations/implications
Only ordinary least squares method is applied in this analysis and the property portal on which this research relies is still at an early stage.
Originality/value
This research contributes to a wider understanding of issues surrounding housing supply in the local markets within China and provides the foundation for local government to better manage supply.
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Philip Arestis and Maggie Mo Jia
This paper aims to examine the evolution of house prices in China and especially the effects of different financing channels on China’s house prices.
Abstract
Purpose
This paper aims to examine the evolution of house prices in China and especially the effects of different financing channels on China’s house prices.
Design/methodology/approach
The author use the own theoretical framework and proceed to test the testable hypotheses by using the autoregressive distributed lag bounds test approach for cointegration analysis and the unrestricted error correction model. Quarterly time series data from Q1 2002 to Q2 2016 are used.
Findings
The results suggest that in the short run, bank loans to real estate development and scale of shadow banking have significant positive effects on house prices. In the long run, the scale of shadow banking and disposable income affects house prices positively and significantly.
Originality/value
This study provides more insights into how and to the extent different financing channels affect China’s house prices, particularly the impact of shadow banking on the house prices.
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Le Ma, Henry Liu and Michael Sing
This study aims to address the gap by empirically exploring how residential construction-production progress, which includes project commencement, under-construction and project…
Abstract
Purpose
This study aims to address the gap by empirically exploring how residential construction-production progress, which includes project commencement, under-construction and project completion, responds dynamically to fluctuations in house prices.
Design/methodology/approach
A vector autoregressive model and an impulse response function are applied to simulate and analyse the circle of the stage-responsiveness of residential construction to residential property price dynamics in the state of Victoria, Australia. The quarterly numbers of dwelling units commenced, under-construction and completed are used as the proxy for the residential construction activities at three stages over the construction progress.
Findings
The analysis indicates that the dynamics are essentially transmitted throughout the construction process and can substantially impact the pace of production progress. The findings from this study provide an empirical base that should be useful in developing price-elasticity and production theories applicable to the context of residential property construction.
Research limitations/implications
The findings described above have been generated basically by examining the case of Victoria, Australia at a macro level. The generalisation of the research output needs to be verified further by future researchers using data collected from other regions/countries. Nevertheless, the reliability of the conclusions with particular practical implications can be substantially improved by future researchers by analysing more markets and production proxies at the activity level.
Practical implications
Based on new empirical findings, this research argues that building activity (i.e. under construction) played as a gateway between the construction and housing sectors, via which the inter-responsiveness of the housing supply in terms of construction activities and housing prices are transmitted.
Originality/value
This research firstly attempts to explore the inter-responsiveness between the real estate and construction sectors. A simulated circle of the stage-responsiveness of residential construction to residential property price dynamics is proposed, which can serve as a significant foundation for developing the theory of construction production.
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During the post-World War II period, Turkey's housing supply models were limited to individual housings. Three main trends in the construction industry helped overcome this…
Abstract
During the post-World War II period, Turkey's housing supply models were limited to individual housings. Three main trends in the construction industry helped overcome this limitation to a certain extent. These were cooperative societies, spontaneous squatter housing and the build-sell process. Build-sell process later became the most obvious reflection of urban transformation in the 1950s and 1960s. Within this context, this study examines the housing policy of the period and the build-sell process as well as the Rer-1 Apartment Block designed in line with the build-sell process. The Rer-1 Apartment Block was designed and implemented by architect Nejat Ersin between the years 1962-1964, and was constructed in Aşağı Ayrancı District in Ankara. This specific apartment block was examined as an extraordinary example of the build-sell process - which rejects architectural concerns and prioritises profits - as it still incorporated such concerns despite being designed adhering to logic of the build-sell process. For the purpose of this study, an oral history study was conducted with Nejat Ersin. It was, therefore, possible to evaluate Nejat Ersin's apartment block, presenting a new experience in the build-sell context, within the scope of era's social, cultural, political and economic conjecture. The Rer-1 Apartment Block was scrutinized from the build-sell process aspect within the scope of the architect's professional approach.
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