An Analysis of Banking Credits Impact on Housing Price Fluctuations in the Iranian Metropolises

Housing, like any other commodity bears an economic value. Thus, it is not only a consumer good, but rather it is considered to be a capital good, in toto. As a result, the demand for housing as a capital good, is a function of rate of return on capital utilized in housing sector, compared to the rate of return on other forms of capital goods. Similarly price of housing as an immovable good, is a function of regional and local conjecture of demand for and supply of housing and the location of residence in rural or urban areas, per se. In this study, an attempt is made to analyze the factors affecting the housing price volatility in the context of Iranian metropolises by applying the Hierarchical Regression Model for panel data. The results prime facie indicate that the variables affecting housing price variability, with respect to their importance are housing credit, housing rent, regional gross products, exchange rate, inflation rate, and rate of profit for housing credit. However, the coefficients of all variables are statistically significant and consistent with the theoretical basis, sine qua non.