F

&

(1

&

l

)

V

> 0

min

(24)

is that there is a set of critical values, 

V

j

c

, associated with each of a number of household

types

 j 

= 1, . . . 

J, V 

j

min

, which satisfy:

U

(

V

j

&

T

)

U

(

V

,

y

&

UC

)

j

c

,

y

&

UC

j

j

o

o

c

These values of 

V

j

c

 are the quantities of housing that make households indifferent

between moving and staying.  With assumptions about the form of the utility function,

observations on initial housing

 V

o

 and income, and estimates of transactions costs and

user costs, values of 

UC 

could be calculated for each household.  Those estimates could

then be compared to the recent distribution of observed housing purchased, and

calculations could be done of the number of households able to satisfy income and assets

requirements as well as to locate housing in the appropriate value class.

#

 Policy Simulations

. Once a number of the basic parameters of housing demand

have been established, as well as basic information on other parameters such as loan to 

value ratios, mobility rates and the value distribution of new and existing housing, it will be

useful to conduct a series of policy simulations focusing on: 

  Measures to increase mobility;

  Measures to increase transition to ownership;

  Effects of changing loan terms and conditions;

   Loan to value ratio;

   Interest rate;

   Down payment constraints;

   Payment constraints; and

  Decontrol of rents and extended housing allowance.

These simulations can reveal which of a number of alternative policies, separately

or in combination, can have the greatest effects on translating potential demand into

effective demand  and improving the efficiency of the housing sector. 

I 17