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Paper eres2010_323:
EFFECT OF HOUSING SUPPLY CONTROL STRATEGY

id eres2010_323
authors Huang, Yikun; Wang, Xiaocen
year 2010
title EFFECT OF HOUSING SUPPLY CONTROL STRATEGY
source 17th Annual European Real Estate Society Conference in Milan, Italy
summary High-cost threshold induces oligopoly for real estate market, which means a few powerful developers may easily control the supply of houses. On the other hand, land scarcity and regulation also induces the limited housing supply, therefore, housing supply control strategy may exists which can increase the developers' profit. While on demand side, speculative demand exists in housing market as property is not only consumption goods, but also an investment. Such demand is relatively vibrational while it is strongly affected by supply signal. In the paper, we analyze the profit change under supply control strategy and show that how property developers make control decision by introducing a mathematical model. The result suggests supply control strategy may achieve higher profit by stimulating the speculative demand if Control Interval is nonempty. Additionally, we also found that marginal return and marginal cost is not equal when developers facing the discrete real estate demand. VAR model is employed to test the dynamic relationship among housing supply, house price index and developers' profit in Hong Kong. During 1984 to 1997, housing supply was limited due to the Sino-British Joint Declaration; and we can see that supply control in the period significant bring up developers' profit.
keywords Supply control strategy, Speculative demand, Marginal inequality, Hong Kong real estate market
series ERES:conference
email huangyikun1118@163.com
more http://www.eres2010.org/index.asp?page=papers_download
content file.pptx (613,009 bytes)
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ratings
session Housing Economics (6)
last changed 2010/08/04 20:47
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