A Consumer and Investment Model of Housing Demand in Iran

This paper presents a study of the housing demand in Iran according to the consumer and investment approach from 1995 to 2011. The first approach is based on a statistical evaluation of the consumer function, based on a system equation, which describes the consumer housing demand as five groups of consumer goods and services. The second approach evaluates the consumer housing demand as a separate investment good, which depends on several factors. Based on the achieved results, the paper analyzes the influence of the different factors on consumer housing demand.

In the consumer approach behavior of the consumers of deciles urban households all over the country has been assessed, through the panel data by using the Linear Expenditure System (LES) with using Seemingly Unrelated Regression Estimation (SURE) housing consumption demand of households are estimated. The result shows that the housing market has been supportive of the law of demand with a negative income elasticity of 0.81. Also, the cross-elasticity of all groups is negative which indicates that these commodities are supplements for the housing good in the consumption household budget.

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