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Objectives of Chapter:
Discuss the methods that can be used to estimate housing demand. * Estimating demand in general * Local survey-based methods Expected learning results: Main factors in estimating demand for residential properties in general; Apply some methods of estimating demand for residential properties.
Analysing Supply
Table 10.2: Over Supply Situation in Johor Bahru, Based on Selected Property Projects
% of over supply Project Bukit Indah a) Single-storey terrace b) Double-storey terrace Mutiara Rini a) Double-storey terrace b) Double-storey semi-detached Bandar Baru Uda a) Single-storey terrace b) Apartments Indahpura a) Single-storey terrace b) Double-storey terrace Average Source: Sample survey, 2001. 60% 40%
40% 60%
30% 10%
30% 40%
39%
Class Exercise
A town has a working population of 23,000 people. From this figure, 17% are the first-time eligible buyers while 80% of them are non first-time eligible buyers. From these two categories of buyers, 35% are targeted buyers. Entrance to the labour market is estimated to be 2.5% of the working population and 1% are potential buyers. However, only 1% of them are targeted buyers. About 3% of the population working in the town are inmigrants; 1% out of this figure are first-time buyers while 0.5% are non first-time buyers. From the Property Market Report, (PMR) it was found that alien buyers constitutes 0.2% of the total targeted domestic buyers. The information from the PMR also revealed that the market concentration of residential transaction is 64% from the total real estate transaction.
Estimate the demand for properties in the area. If current available stock is 12,000 units, assess the market situation.
Answer
Let say available supply = 12,000 units First-time potential buyers = 5,330 people Assume: one FTPB buys one unit DD-SS balance = 5,300/12,000 = 0.44 DD gap = 12,000-5,330 = 6,670 units Excess supply = 100-44.4% = 55.6% SS excess capacity = 6,670/5,330=125% Severe excess supply, weak demand
qU = X + u
where qU is (n x 1) column vector of sales performance; X is (n x m) vector of product, locational, and neighbourhood attributes, plus some other pertinent factors influencing sales performance; is (n x 1) column vector of parameter estimates, u is (n x 1) column vector of error term.
QD = qU x QS or QD = adj. qU x QS where QD is predicted demand; qU is estimated take-up rate from the statistical model; and QS is number of units of a given product proposed to be built.
Thank you!