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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.

Suggested Citation

  • Chu-Chia Lin & Sue-Jing Lin, 1999. "An Estimation of Elasticities of Consumption Demand and Investment Demand for Owner-Occupied Housing in Taiwan : A Two-Period Model," International Real Estate Review, Global Social Science Institute, vol. 2(1), pages 110-125.
    • Handle: RePEc:ire:issued:v:02:n:01:1999:p:110-125
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    Citations

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    Cited by:

    1. Wen-chieh Wu & Sue-Jing Lin, 2002. "Housing Demand with Random Group Effects," International Real Estate Review, Global Social Science Institute, vol. 5(1), pages 133-145.
    2. Hanna Augustyniak & Jacek Łaszek & Krzysztof Olszewski & Joanna Waszczuk, 2013. "Housing market cycles – a disequilibrium model and its application to the primary housing market in Warsaw," Chapters from NBP Conference Publications, in: Hanna Augustyniak & Jacek Łaszek & Krzysztof Olszewski (ed.), Papers presented during the Narodowy Bank Polski Workshop: Recent trends in the real estate market and its analysis, 2013, chapter 11, pages 5-38, Narodowy Bank Polski.
    3. Yadi Zhu & Feng Chen & Ming Li & Zijia Wang, 2018. "Inferring the Economic Attributes of Urban Rail Transit Passengers Based on Individual Mobility Using Multisource Data," Sustainability, MDPI, vol. 10(11), pages 1-17, November.
    4. Wen‐Shwo Fang & Kuan‐Min Wang & Thanh‐Binh T. Nguyen, 2008. "Is Real Estate Really an Inflation Hedge? Evidence from Taiwan," Asian Economic Journal, East Asian Economic Association, vol. 22(2), pages 209-224, June.
    5. Kuan-Min, Wang & Yuan-Ming, Lee & T.T.Binh, Nguyen, 2008. "Asymmetric Inflation Hedge of Housing Return: A Non-linear Vector Error Correction Approach," International Real Estate Review, Global Social Science Institute, vol. 11(1), pages 65-82.
    6. Antipa, P. & Schalck, C., 2009. "Impact of Fiscal Policy on Residential Investment in France," Working papers 270, Banque de France.

    More about this item

    Keywords

    Consumption demand; investment demand; elasticity and housing; Taiwan;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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