Document Type : Research Paper
Authors
1 Ph.D. student in Economic Sciences, Department of Economics ,Central Tehran Branch, Islamic Azad University, Tehran, Iran.
2 Department of Economics, Central Tehran Branch, Islamic Azad University, Tehran, Iran
3 Assistant Prof , Department of Finance and Banking, Allameh Tabataba’i University, Tehran, Iran
4 , Department of Industrial Management, Central Tehran Branch, Islamic Azad University, Tehran, Iran.
Abstract
Housing, as both shelter and a non-substitutable commodity, has a dual nature serving as both a consumable good and a durable capital asset. In this paper, using an agent-based theoretical framework, a systemic model for housing price formation is developed that incorporates the presence of heterogeneous agents, including consumer buyers, investors, and real estate developers. Using real economic data from Iran and quarterly data for the period 1998 to 2022, the proposed model is estimated through a genetic algorithm.The results of shock analyses reveal that speculative investor behavior plays a significant role in the dynamics and volatility of housing prices. When speculative investors are removed from the market, housing prices align with real production costs and effective demand, referred to as the fundamental equilibrium price. However, the presence of speculative behavior can lead to persistent deviations from this level and even trigger explosive price surges in the housing market. According to the empirical findings, the Iranian economy exhibited a pronounced degree of forward-looking behavior amounting to 52.16 percent along with an unstable, bubble-type dynamic over the examined period.From a policy perspective, the model demonstrates that the loan-to-price ratio of mortgages is not an effective tool for market regulation during boom or recession periods a finding consistent with real-world market evidence. In contrast, reducing construction and development costs could enhance market rationality, decrease the sensitivity of forward-looking investors, and ultimately strengthen price stability, revitalize the market, and stabilize housing price.
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