A Study of Ingredients Affecting the Private Sectures Inclination Towards Housing Supply

Just like any other economic field, housing market has two basic foundations which are demand and supply. Its obvious that disequilibrum between these foundations, will drasticaly affect the housing affordability and can also lead to wide slump in many markets. That’s why, policy makers usually intend to stimulat the supply by means of providing low intrest loans, low priced land, etc. In this paper the correlation of private sector’s inclination to invest and supply housing with various criteria has been analyzed. Dependent variables deputed for investment inclination are investment volume and estimated floor area of started residential buildings, completed residential units and total floor area and number of residential units in permits issued. On the other hand, the independent variables used are liquidity, house and land price and accumulated deficit of residential units. Besides, the Hodrick-Prescott filter (HP) has been applied to time series data, in order to separate the trend components and the cyclic components. The result of analysis indicates that the liquidity has the most correlation and the accumulated deficit of residential units has the least correlation with the private supply inclination.