demand for both housing and residential credit according to both demand  and supply side

policy shortcomings.

Among the key questions to be addressed in such studies are the following:

1. How does one define  potential demand  and  effective demand  in operationally

meaningful ways for (a) housing and (b) mortgage credit?

2. How can potential and effective demand be measured?

3. What are the key determinants of potential and effective demand?  What are the

key barriers to translating potential into effective demand?

4. How can the effects of these determinants (and of barriers) be measured and

quantified?

5. What are the key priorities for policy and institutional reform to narrow gaps

between potential and effective demand?

Key elements of a series of studies to address these questions include the

following:

1. Background studies of key housing indicators.

2. Studies of the aggregate supply demand relationship using stock/user matrices.

3. Studies of the structure of housing prices

  Hedonic price studies

  User cost studies

4. Traditional models of demand for housing and mortgage credit.

5. More realistic models of demand and supply.

6. Policy simulations regarding barriers to realizing effective demand.

This annex briefly describes each of these key elements.  Technical models are

developed for both macroeconomic and microeconomic approaches.  Adjustments to these

traditional models are then discussed.  Please note that this annex has been developed

for the use of various technicians, including economists, statisticians, and technical

housing policy analysts.

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