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A Simple Model of Housing Rental and Ownership with Policy Simulations

Author

Listed:
  • Andrew Coleman

    (Motu Economic and Public Policy Research)

  • Grant Scobie

    (NZ Treasury)

Abstract

This paper develops a simple model that captures the essential features of the supply and demand for housing, and which is used to evaluate the impact of a range of policy interventions. The model incorporates functions describing the demand to rent or purchase housing, a function describing the supply of rental housing, and a function describing the supply of new houses. The model is used to explore the effects on prices, quantities, and owner occupancy (homeownership) rates of policies that change the stock of housing, that alter the taxes and subsidies facing landlords and homeowners, that alter the cost of new housing, and that alter real interest rates. The results suggest that despite the widespread attention owner occupancy rates have attracted, they are not a particularly helpful guide to the state of the housing market. Typically they are quite insensitive to policy interventions, a result that follows from the integrated view of both the rental and ownership market, adopted in this study.

Suggested Citation

  • Andrew Coleman & Grant Scobie, 2009. "A Simple Model of Housing Rental and Ownership with Policy Simulations," Motu Working Papers 09_08, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:09_08
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    File URL: https://motu-www.motu.org.nz/wpapers/09_08.pdf
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    Cited by:

    1. Grimes, Arthur & Hyland, Shane, 2013. "Housing Market Dynamics and the GFC: The Complex Dynamics of a Credit Shock," Motu Working Papers 291377, Motu Economic and Public Policy Research.
    2. Andrew Coleman, 2017. "Housing, the 'Great Income Tax Experiment' and the intergenerational consequences of the lease," Motu Working Papers 17_09, Motu Economic and Public Policy Research.
    3. Andrew Coleman, 2010. "The long-term effects of capital gains taxes in New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 44(2), pages 159-177.
    4. Michael Berlemann & Julia Freese, 2013. "Monetary policy and real estate prices: a disaggregated analysis for Switzerland," International Economics and Economic Policy, Springer, vol. 10(4), pages 469-490, December.
    5. Grimes, Arthur & Hyland Sean, 2013. "A New Zealand Regional Housing Model," Motu Working Papers 291392, Motu Economic and Public Policy Research.
    6. Coffey, Cathal & Hogan, Paul J. & McQuinn, Kieran & O'Toole, Conor & Slaymaker, Rachel, 2022. "Rental inflation and stabilisation policies: international evidence and the Irish experience," Research Series, Economic and Social Research Institute (ESRI), number RS136.
    7. Andrew Coleman, 2017. "Housing, the ‘Great Income Tax Experiment’, and the intergenerational consequences of the lease," Working Papers 1709, University of Otago, Department of Economics, revised Apr 2017.

    More about this item

    Keywords

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    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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