Analyzing Behavior of Agents in the Housing Sector for Formation of Equilibrium Pattern of Housing Prices in Iran

Document Type : Original Article


1 Associate Professor of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran.

2 Postdoctoral Researcher in Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran



Investigating the behavior of agents in the housing sector, including investors, households and developers, is very important. A large part of housing price fluctuations is caused by the activities of these agent, especially the investors in this sector, and these housing price fluctuations influence other economic sectors because the housing sector has a lot of backward and forward relationships with other sectors. This research aims to analysis of the behavior of agent in the housing sector in the forming of the equilibrium pattern of housing prices in Iran using the mathematical optimization method for the period of 1991 to 2022. The results show that there is a positive relationship between the equilibrium price of housing with the construction cost of each residential unit, household income and investors' expectations of housing prices. Also, there is a direct relationship between the volume of trading of investors and their expectations of housing prices. When the expectations of housing prices are in the range of zero to 1.71 and more than 1.71, investors will be in the position of selling and buying housing, respectively. Hence, the relationship between the equilibrium price of housing and the volume of trading of investors with the risk component of investors is positive, and if the equilibrium price of housing is more (less than) 2.33, investors take a selling (buying) position. On the other hand, if the investors are in the low range of zero according to the amount of risk and volume of trading of investors, then the investors are in the selling position and if they are in the upper range of zero, the investors are in the buying position.


Main Subjects

- Álvarez-Román, L., & García-Posada, M. (2021). Are house prices overvalued in Spain? A regional approach. Economic Modelling, 99, 105499.
- Balounejad nouri, R., & farhang, A. (2022). Investigating the Convergence of Housing Prices in Provincial centers of Iran: Relative Convergence Approach. Journal of Iranian Economic Issues, 9(1), 27-51. doi: 10.30465/ce.2022.39479.1734 (In Persian).
- Bolt, G., Phillips, D., & Van Kempen, R. (2010). Housing policy, (de) segregation and social mixing: An international perspective.
- Bostic, R., Longhofer, S., & Redfearn, C. (2007), Land leverage: decomposing home price dynamics. Real Estate Economics, 35, 183-218.
- Cerutti, E., Correa, R., Fiorentino, E. & Segalla, E. (2015). Changes in Prudential Policy Instruments–A New Cross-Country Database. Manuscript, International Banking Research Network.
- Dieci, R., & Westerhoff, F. (2012). A simple model of a speculative housing market. Journal of Evolutionary Economics, 22(2), 303-329.
- Javaheri, B., Manochehri, S., & Mozaffari, Z. (2022). Asymmetric Effects of Housing Price on Iran Stock Market Participation: Quantile Regression Approach. Journal of Applied Economics Studies in Iran, 11(43), 39-69 (In Persian).
- Jafari, A., Ezzatpanah, B., & Beig Babaeib, B. (2022). Spatial and social assessment of the affecting housing prices factors: The case study of Urmia city. Geographical planning of space quarterly journal, 12 (4), 145-161(In Persian).
- Gong, L., Wang, C., Zhao, F. & Zou, H. (2017). Land-price dynamics and macroeconomic fluctuations with non-separable preferences. Journal of Economic Dynamics and Control, 83, 149-161.
- Gholizadeh, A.A. & Asgari, M. (2018). Income inequality and housing affordability in Iran. Doctoral thesis of Bu Ali Sina University (In Persian).
- Gholizadeh A.A., & Noroozonejad, M. (2019). Dynamics of Housing Prices and Economic Fluctuations in Iran with the Approach of Dynamic Stochastic General Equilibrium (DSGE). Jemr, 10 (36), 37-74 (In Persian).
- Gholizadeh, A.A. & Bakhtiaripour, S. (2012), Effect of credit on housing prices in Iran. Quarterly Journal of Applied Economic Studies of Iran, 1(3), 159-179 (In Persian).
- Khodakashi, F. & Razban, N. (2013). The role of speculation on housing price changes in Iran. Economic Research and Policy Quarterly, 22(71), 5-28 (In Persian).
- Otrok, C., & Terrones, M.E. (2017). Global house price fluctuations: Synchronization and determinants. In NBER International Seminar on Macroeconomics (Vol. 9, No. 1, pp. 119-166). Chicago, IL: University of Chicago Press.
- Oh, S., Ku, H., & Jun, D. (2022). A comparative analysis of housing prices in different cities using the Black–Scholes and Jump Diffusion models. Finance Research Letters, 46, 102241.
- Manochehri, S., & Gholizadeh A, A. (2022). The Response of Speculation in the Housing Market to Exogenous Shocks in Iran. QJER, 22 (2) (In Persian).
- Maynou, L., Monfort, M.,Bruce Morley, B. & Ordonez, J. (2021). Club convergence in European housing prices: The role of macroeconomic and housing market fundamentals. Economic Modelling, 103, 1-22.
- Mousavi, M. & Drodian, H. (2014), Analysis of factors affecting housing prices in Tehran. Economic Modeling Quarterly, 9(31), 103-127 (In Persian).
- Tomal, M. (2022). Modelling housing rents using spatial autoregressive geographically weighted regression: A case study in Cracow, Poland. ISPRS International Journal of Geo-Information, 9(6), 346-356.
- Zheng, M., Wang, H., Wang, C., & Wang, S. (2017). Speculative behavior in a housing market: Boom and bust. Economic Modelling, 61, 6-50.