A Consumer and Investment Model of Housing Demand of Iran: Estimation and Policy Implications

Mohsen Amini Khouzani, Davoud Behboudi, Parviz Mohammadzadeh, Mahmoud Shirkosh and Ehsan Rajabi

Economic Studies journal, 2016, issue 2, 41-58

Abstract: This paper presents a study of the housing demand in Iran according to the consumer and investment approach during the period of 1995-2011. The first approach is based on a statistical evaluation of the consumer function, based on system equations, which describes the consumer housing demand as five groups of consumer goods and services. The second approach evaluates the consumer housing demand as a separate investment good, which depends on several factors. Based on the achieved results, the paper makes an analysis of the influence of the different factors on the consumer housing demand.In consumer approach behavior of the consumers of deciles urban households in all over the country has been assessed, through the panel data by using the Linear Expenditure System (LES) with using Seemingly Unrelated Regression Estimation (SURE) housing consumption demand of households are estimated. Result shows that housing market has been support law of demand with negative income elasticity of 0.81. Also the cross-elasticity of all groups are negative which is indicating that these commodities are supplement for the housing good in the consumption household budget. The second approach, capital characteristic of the commodity, investigates the impact of price house, and household income, local gold price, consumer goods price index and housing credits on effective housing demand of Iran in same period. The main result of this approach is that price elasticity of housing is positive.

JEL-codes: R20 R21 R31 R32 (search for similar items in EconPapers)
Date: 2016
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