Housing Demand

Question 1

What is housing need.?

Answer 1

Unconstrained assessment of the number of homes needed based on census data.

Question 2

Hew is housing need measured

Answer 2

Based on the growth of the number of households resulting from demographic growth and splitting of households may include renewal of part of the stock and maintenance of stock of vacant housing

Question 3

Factors that influence demand?

Answer 3

Factors that influence demand are not only demographic -age, household size, and migrations,-but also (and mostly?) economic: amount and nature of income and wealth; availability, accessibility and cost of housing finance; taxes and subsidies; plus nature of property rights, location

Question 4

What is demand and effective demand

Answer 4

Demand is willingness to pay for a specific type of dwelling
• Effective demand is willingness and ability to pay (access to credit)

Question 5

How can demand be estimated

Answer 5

Modeling,
Nature of future demand your be estimated by surveys
Analyze recent movers
Ask household heads and young adults future plans

Question 6

Effective De depends on?

Answer 6

Number of individuals requiring it and purchasing power

Question 7

Discuss inelastic supply

Answer 7

In some cities, housing is in inelastic supply because there is little or no open land and local regulations either restrict development or make it prohibitively expensive or slow
• Demand for a location leads to bidding up of the price of land in order to equilibrate housing demand with the available supply
• The inelasticity of housing supply also leads to price changes, and a correlated change in the demand for urban housing, in cities that are experiencing declining demand
• Since housing does not quickly depreciate once built, if the demand for a city declines then house prices must fall since quantity cannot easily adjust downward

Question 8

Determinants of housing De

Answer 8

Determinants of housing demand •
Demography
• Population growth leads to a rising need for housing
• When population is constant or even declining, the demand for housing can still increase due to the growing number of households because their size reduces
• Household formation determined by:
• No. of new households, composition of households, size of households, socio- cultural factors, birth/death rates, divorce rates/marriage rates, lifestyle/cycle changes –change from extended to nuclear families etc. single households etc, life expectancy, migration, household income, household tenure choice, government policies relating to all these factors

Income
• The rise of the purchasing power is related to the increase of the real disposable income
• Even if the number of private households remains unchanged, the increase in their welfare leads to the growing demand for housing
• Interest rates
• Play a major role in determining the cost of borrowing

Availability and cost of credit
• Due to the high house price to income ratio, most people are reliant on credit to buy

Question 9

Credit availability is determined by?

Answer 9

Cost of credit
Risk of default
Interest rate, deposit, interest rate
Credit worthiness
Employment type
Loren value to property value ratio

Question 10

_De challenges

Answer 10

Rising inequality: indebtedness
Large % of people in non salaried jobs
Low mortgage penetrations
Housing prices rising faster than income