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Discrete Choice Modelling of Urban Housing Markets: A Critical Review and an Application

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  • Judith Yates

    (Department of Economics, H04, School of Economics and Political Science, University of Sydney, NSW 2006, Australia. J.Yates@econ.usyd.edu.au)

  • Daniel F. Mackay

    (Department of General Practice, University of Glasgow, 1 Horselethill Road, Glasgow, G12 9LX, UK. Daniel.Mackay@clinmed.gla.ac.uk)

Abstract

The housing choice literature is a vast area of housing research which has resulted in giant leaps forward in recent years in terms of its econometric modelling. This is due in large part to the significant increases now available in computing power allowing researchers to combine the latest advances in theory with empirical application. This paper brings together and critically reviews the housing choice literature and techniques that have been used to model the household's housing choice decision. The basic multinomial logit model is reviewed alongside the more recent advances in discrete choice modelling-the nested multinomial logit model and the heteroscedastic extreme value model. The various techniques are illustrated using data from the Australian census of 1986 and 1996 to model housing choice in Sydney. The results show that careful consideration must be given to the assumptions underlying any chosen modelling technique if one is not to draw misleading conclusions from the analysis.

Suggested Citation

  • Judith Yates & Daniel F. Mackay, 2006. "Discrete Choice Modelling of Urban Housing Markets: A Critical Review and an Application," Urban Studies, Urban Studies Journal Limited, vol. 43(3), pages 559-581, March.
    • Handle: RePEc:sae:urbstu:v:43:y:2006:i:3:p:559-581
    DOI: 10.1080/00420980500533695
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    References listed on IDEAS

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    9. Haque, Md Bashirul & Choudhury, Charisma & Hess, Stephane, 2020. "Understanding differences in residential location preferences between ownership and renting: A case study of London," Journal of Transport Geography, Elsevier, vol. 88(C).
    10. Maria I. Marshall, 2006. "Who Chooses To Own A Manufactured Home ?," Working Papers 06-12, Purdue University, College of Agriculture, Department of Agricultural Economics.
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    12. Marius Claudy and Claus Michelsen, 2016. "Housing Market Fundamentals, Housing Quality and Energy Consumption: Evidence from Germany," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
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    14. James M. Davis & Guillermo Gallego & Huseyin Topaloglu, 2014. "Assortment Optimization Under Variants of the Nested Logit Model," Operations Research, INFORMS, vol. 62(2), pages 250-273, April.
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