b. Utilities payments

c. Transactions costs (key money, agency fees, etc.)

2. For owners

a. Market value of unit (from owner estimate or hedonic price studies)

b. Outstanding mortgage balance

c. Mortgage terms

(1) Interest rate

(2) Term

(3) Monthly payment

d. Initial down payment percentage relative to purchase price

e. Property tax rate (effective rate as percentage of market value)

f. Maintenance expenditures as percentage of market value

g. Estimated depreciation rate

h. Interest rate on non housing investments

I. Interest rate on non housing based borrowing (e.g., consumer loan rate)

j. Estimated annual rate of appreciation of housing

k. Non priced mortgage characteristics prepayment penalties, default

costs, excise taxes and transfer fees, etc.

Sources for user cost studies include household interviews, borrower interviews,

and interviews with bank officials.

4.0

TRADITIONAL MODELS OF DEMAND AND SUPPLY

Models of housing demand and supply that are traditionally applied within market

economies  can provide useful comparisons and insights into the nature of housing market

disequilibria in Poland. Some of these models are briefly outlined below. 

4.1

Microeconomic Demand for Housing and Credit

The simplest and most widely applied models of housing demand are log linear

models that assume constant price and income elasticities of demand.  These facilitate

straightforward comparisons with demand models estimated in many developing and

industrialized countries. They are:

1. a.  Cross section data

(

,

V

(

ay

,

y

P

p

%

1)

(1)

h

Z

(

where:

V* = market value (for owner occupied housing) or rent (for renters)

I 7