How does vacant housing redevelopment policy reshape regional housing markets? A dynamic spatial housing-CGE analysis

With regional populations declining, reduced housing demand has led to a growing prevalence of vacant housing, long regarded as one of the most visible manifestations of urban shrinkage. Beyond being an outcome of demand contraction, vacant housing constitutes an inactive portion of the existing stock that constrains effective supply despite its physical presence in the market, thereby reducing allocative efficiency in regional housing systems. This study develops a dynamic Spatial Housing-CGE model to analyze the impacts of vacant housing redevelopment policies on regional housing markets. The simulations show that policy effects vary spatially depending on the policy’s focus and objectives. Vacant housing redevelopment in the old downtown increases housing demand by 0.038% annually and reduces prices by 0.881%—indicating its effectiveness for stabilizing markets and promoting spatial equity in declining inner-city districts. In contrast, redevelopment in the new downtown raises demand by 0.023% and lowers prices by 0.41%—making it more suitable for enhancing urban competitiveness and supporting growth in emerging centers. Moreover, integrating transportation infrastructure with redevelopment in the old downtown creates a synergistic effect that amplifies policy outcomes, driving up housing demand by 0.047% and regional welfare by 5.541%—the most substantial gains among all scenarios, though accompanied by notable adverse spillover effects on surrounding markets. These findings reveal how vacant housing redevelopment policies reshape regional housing markets, underscoring that their effectiveness and efficiency vary depending on whether the policy goal emphasizes spatial equity or growth-oriented development.