Housing Investment Model with Parallel Markets Approach

Introduction :

Housing is one of the important parts of development in a society. This sector with its multifaceted dimensions has many effects in presenting the features of the society. Planning in this sector, on the one hand, has economic and social importance, and on the other hand, due to the employment generation of this sector and its connection with other economic sectors, it is considered a suitable tool for the realization of economic policies. At present, when the depth of the financial market is very low and it has little capacity to absorb a large amount of liquidity in the country, there are few options for keeping people’s savings. These options include bank investment deposits, stocks, currency, gold, coins, and real estate. Since housing is only one form of asset storage, the demand for housing will be affected by the demand for other markets. Fluctuations in the markets of other assets affect the housing market. In this study, an attempt has been made to determine the effect of the presence of housing and its share of investment in Iran by emphasizing the role of substitute assets such as (the gold market, exchange rate, stock price, and interest rate of bank deposits) in the period of prosperity and recession.

In terms of its nature, the current research is descriptive-analytical, and its purpose is considered applied research. In this research, the data used were collected quarterly from the central bank’s balance sheet, economic indicators, and statistics of private sector construction activities. The Delphi method was used to survey and receive the opinions of experts and specialists. In this case, 20 experts and specialists in the housing and urban planning field were selected and their opinions were asked through a virtual questionnaire about the research topics. For data analysis, a multivariate covariance test, mean-variance model, and self-explanation method with distribution intervals (ARDL) were used to analyze data covariance.

Based on research findings, there is a significant relationship between housing and parallel markets. So the housing yield has the highest correlation coefficient with the exchange rate and the lowest correlation coefficient with the interest rate of bank deposits. The non-significance of the interest rate of bank deposits indicates that this asset has not been able to play an effective role in the amount of housing investment as a housing competitor. Exchange rate variables and stocks have negative returns with housing, which means that housing has a substitution relationship with these two assets in the asset portfolio. Stocks with a yield of 40.43 and a risk of 58.09 have been volatile assets in recent decades, which have gone through many ups and downs. The estimation of the short-term model shows that the coefficients of the stock price index variables have a negative and significant effect on the investment of the housing sector at the confidence level of 95 and with 2 intervals. The effect of the exchange rate is at a meaningless level with 4 positive and significant intervals. The effect of coin price on residential investment is significant at the level of 5 intervals and with a coefficient of 2.03 In the short term, the interest variable of bank deposits does not have a significant effect on residential investment, but it has a significant effect with a break. According to the long-term equilibrium relationship between research variables, the results show that the elasticity of housing investment to the exchange rate is 28. The elasticity of housing investment to the stock price index is 0.21 The indices of coin price and interest rate of bank deposits affect residential investment with coefficients of 0.11 and 0.9, respectively.

The results of the research show that people with low income levels and risk aversion allocate more of their investments to bank deposits. The analysis of the results shows that the yield of the stock market is higher than other markets, but the risk of this type of asset is also higher than other assets. That is, housing has a substitution relationship with stocks in the portfolio of assets in two investment periods. During the housing recession season, people tend to invest in the stock market, and during the stock market decline, investments tend toward housing. On the other hand, with the prosperity of the housing market, the capital motivation of the housing market also increases and the funds are attracted to this market, which shows the positive and significant relationship between the exchange rate variable and residential investment. The non-significance of coin price in long-term and short-term patterns indicates that coin has not been a significant competitor for housing during the last decade due to price stability and low profitability, and its increase or decrease has not had a significant impact on housing investment. Due to their almost constant rate, long-term bank deposits have not been able to play a significant role as a housing competitor in housing investment fluctuations. The coefficient of the exchange rate has also been significant and has a positive sign in all the fulfilled models, although in the short term, this result may be defensible due to the existence of speculative motives, but in the long term based on the asset portfolio theory and considering the relationship between housing and currency substitution, the economic justification of this relationship is difficult.