Urban Development Policy Making

Urban Development Policy Making

Simulating the Effect of Housing Price Changes, Household Income, and Education on the Recomposition of Housing Demand: Evidence from a Multistage Discrete Choice Model

Document Type : Original Article

Authors
1 Urban Economics Researcher, PhD in Economics, Tehran, Iran
2 Full Professor, Department of Economic Development and Planning, University of Tabriz, Tabriz, Iran
3 Assistant Professor, Department of Economics, University of Tabriz, Tabriz, Iran
10.22034/judpm.2026.580703.1101
Abstract
The housing market is closely linked to household welfare, residential security, income distribution, and social stability, making it a central area of economic and urban policy. However, much of the existing literature examines the effects of economic changes mainly on aggregate housing demand, while households often respond by reallocating their demand across different housing alternatives. This article investigates the effects of housing price changes, household income, and educational attainment on the recomposition of housing demand using a multistage discrete choice econometric approach. Housing alternatives are classified into 24 categories based on tenure status, dwelling type, and unit size. Households are also grouped into 15 income–education categories by combining income quintiles with three levels of household head education. The empirical framework is based on three discrete choice models: a binary logit model for tenure choice, a multinomial logit model for dwelling type, and an ordered logit model for housing size. Three simulation scenarios are then examined: a 10 percent increase in housing prices, a 10 percent increase in household income, and a one-year increase in education. The results show that higher housing prices reduce homeownership, increase rental demand, and shift demand toward smaller and apartment units while reducing demand for large non-apartment dwellings. In contrast, higher household income strengthens homeownership and increases demand for larger and non-apartment units. Education has a similar but weaker effect compared with income. The findings also indicate that lower-income households are more sensitive to all scenarios.
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Articles in Press, Accepted Manuscript
Available Online from 23 August 2026

  • Receive Date 06 May 2026
  • Revise Date 16 August 2026
  • Accept Date 23 August 2026
  • Publish Date 23 August 2026