While other variables can be useful to characterize stock demand, such as the
market value of dwellings, alternative measures entail far heavier data requirements and
are likely to be measured with far greater error than the number of dwellings.
In any case, estimations of both the desired stock and the rate of adjustment of
actual to desired stock (whether inferred from Polish time series data or from international
comparisons) are likely to be highly revealing concerning both the differences in potential
and effective demand and the degree to which various barriers impede the process of
adjustment toward equilibrium levels of housing stock. Indeed, one could, in principle, let
the adjustment rate be modeled as policy dependent, whereby, for example, it depended
on the availability of mortgage credit, mortgage terms and conditions, etc.
In that case, Eq. (8) would be rewritten:
P
N
(
(
M
)
f HH
,
y
,
Z
,
h
%
(1
& (
(
M
) )
N
t
t
t
t
(9)
P
t
&
1
o
t
where econometrically
N
t
would be estimated by regressing current stock
on the lagged stock,
N
;
t 1
presumed determinants of the desired stock,
f( ); a vector of variables affecting the speed of adjustment,
(
(
M
); and
interaction terms between
M
, arguments of f (), and
N
.
t 1
Modeling of the aggregate relationships described above requires
time
series data on the stock of dwellings, determinants of desired demand
for housing stock, and determinants of the speed of adjustment of
actual to desired demand
.
b. Mortgage stock demand
In a naive model of the demand for outstanding mortgage credit,
demand for mortgage credit is directly linked to demand for housing,
assuming a fixed loan to value ratio and observing that:
S
(
t
M
(
t
N
l V
(
(10)
t
t
N
t
where
S *
t
= stock of mortgages at time
t
. In the naive model, it is
implicitly assumed that mortgages are granted as they are demanded, in
effect assuming that there are no independent determinants of mortgage
demand and supply.
c. Dwelling flow demand
I 11
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