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An Estimation of Elasticities of Consumption Demand and Investment Demand for Owner-Occupied Housing in Taiwan : A Two-Period Model

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    Abstract

    Buying a house usually satisfies housing consumption demand and housing investment demand, simultaneously. In order to disentangle the above two types of demand, households, in this study, are separated into three subtenure groups i.e. renters, owners owning one house, and owners buying a second or more houses. Presumably, renting a house is for consumption only, while buying a second house is usually for investment purposes. Applying a two-period model and two data sets from DGBAS and from Land Bank of Taiwan, the estimated results are as follows: Firstly, the income elasticity of pure consumption demand for housing is very close to unity (1.0413). Secondly, the income elasticity for a pure investment demand is greater than one (1.2643). Finally, for a household owning only one house, the shares for consumption motive and for investment motive are 26% and 74%, respectively.

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    File URL: http://www.umac.mo/fba/irer/papers/past/vol2_pdf/110-125TW.pdf
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    Bibliographic Info

    Article provided by Asian Real Estate Society in its journal International Real Estate Review.

    Volume (Year): 2 (1999)
    Issue (Month): 1 ()
    Pages: 110-125

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    Handle: RePEc:ire:issued:v:02:n:01:1999:p:110-125

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    Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Web page: http://www.asres.org/

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    Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Web: http://www.asres.org/

    Related research

    Keywords: Consumption demand; investment demand; elasticity and housing; Taiwan;

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    Cited by:
    1. Antipa, P. & Schalck, C., 2009. "Impact of Fiscal Policy on Residential Investment in France," Working papers 270, Banque de France.
    2. Wen-chieh Wu & Sue-Jing Lin, 2002. "Housing Demand with Random Group Effects," International Real Estate Review, Asian Real Estate Society, vol. 5(1), pages 133-145.

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