A housing demand model: a case study of the Bangkok Metropolitan Region, Thailand

Vajiranivesa, P 2008, A housing demand model: a case study of the Bangkok Metropolitan Region, Thailand, Doctor of Philosophy (PhD), Property, Construction and Project Management, RMIT University.


Document type: Thesis
Collection: Theses

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Title A housing demand model: a case study of the Bangkok Metropolitan Region, Thailand
Author(s) Vajiranivesa, P
Year 2008
Abstract Housing -as a special product- distinguishes the behaviour of its demand and supply. An imbalance of housing supply against demand can be a crucial part of economic crises, as happened in Thailand between 1996 and 1997. Can the housing market be controlled in a robust and rigid system? A secure market depends on balancing demand and supply dynamics; therefore, any demand has to be quantified.

This research demonstrates how housing demand can be modelled by using a System Dynamics approach. This modelling concept has been set up, using the root causes which generate housing demand. Causal factors which influence housing demand are collated, and mapped. A model simulating housing demand was developed. Keys to this are demographic, social and economic factors. This model is presented with a view to pursuing new approaches for housing demand modelling. Conceptual ideas are developed on how to quantify housing demand, and the result of the simulation can then be used as a basis for policy and decision making in housing markets.

The housing demand model developed from this research depends on many interrelated factors. These factors can be categorized into three broad groups, following precedent set by a review of available literature. Initial factors included demographics which deal with population number, age structure, including migration, birth and death rate. Next, social factors, in terms of marriage, divorce and splitting-household rate (i.e. household formation rate) play a major role in creating "housing needs." The last factor is that of economics: conversion of "housing needs units" into "housing demand units." Income (substituted by GDP growth index in the model), housing loans, and housing price indices, used in the modelling, are the main economic factors which constrain housing demand.

Simulations from the model clearly show that the underlying housing needs line was the crucial factor that limits the capacity of housing consumption in the housing market. Based on 30 years of historical data (from 1977 to 2006), the research also showed that the surplus reached its maximum when the housing sales unit was twice that of the underlying housing needs (as happened between 1994 and 1996). Furthermore, the deficit reached its maximum when the housing sales unit was half that of the underlying housing needs (as happened between 1999 and 2002). With respect to accumulated numbers, the surplus of housing sales units exceeded that of the underlying housing needs and generally reconciled with that housing vacancies in the market.

The evidence from the model simulations also supports a view that the oscillated movement of housing sales is constrained by the balance of reaction between underlying housing needs and housing sales. The cycle of housing sales appears to be running over and under the underlying housing needs line because of the limit of housing consumption capacity, constrained by underlying housing needs.

The consequence of this research can be anticipated as a significant social benefit through the provision of better housing where and when needed.
Degree Doctor of Philosophy (PhD)
Institution RMIT University
School, Department or Centre Property, Construction and Project Management
Keyword(s) Housing
housing demand
model
system dynamics
econometrics
Bangkok
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