Abstract
First, we will present a microeconomic model of Japanese housing demand based on the Japanese home financing system. The focus of the model will be on the tradeoff between housing quality and quantity. We will derive the owner-occupied housing user cost of capital for several different subsamples. The unique feature of the model is the use of nonlinear budget constraints. Next, we will try reduced form estimation based on a composite housing demand model and a characteristic housing demand model. Estimation results indicate that those who do not receive funds from the JHCL are more price-elastic and more income-elastic for composite housing demand and floor demand. Recipients of JHLC funds have more price-elastic demand for quality as they compensate for institutional constraints on their selection of floor space. Finally, we will estimate the effect on housing demand if JHLC loan interest rates are not classified by the size of a house but are adjusted to the private loan rate and if the JHLC lends funds based on the market value of the house. We will also calculate the excess burden for each household created by the present JHLC home financing policy. Households distort their housing consumption by overconsuming quantity and underconsuming quality.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Brownstone, D., Englund, P., and Persson, M. “Tax Reform and Housing Demand: The Distribution of Welfare Gains and Losses.”European Economic Review 32 (1988) 819–840.
Hausman, J.R. “The Econometrics of Nonlinear Budget Sets.”Econometrica 53(6) (1985) 1255–1282.
Horioka, Charles Y. “Tenure Choice and Housing Demand in Japan.”Journal of Urban Economics 24(3) (1988) 289–309.
Housing Loan Corporation, Residential Land Department.Report on the Survey of Housing Site Prices (in Japanese), 1985 ed. (1986).
Housing Loan Corporation,Housing Loan Corporation Yearbook (in Japanese), 1985 ed. (1985).
Ministry of Construction.Construction Statistics Yearbook (in Japanese), 1984 ed. (1985).
Ministry of Construction.Results of Survey on Financing Private Housing in 1985 (in Japanese), (1986).
Moffitt, R. “The Econometrics of Kinked Budget Constraints.”Journal of Economic Perspectives 4 (1990) 119–139.
Prime Minister's Office.Report on the National Survey of Prices (in Japanese), 1985 ed. (1985).
Rosen, H.S. “Housing Decisions and the U.S. Income Tax: An Econometric Analysis.”Journal of Public Economics 11 (1979) 1–23.
Rosen, H.S. “Housing Subsidies: Effects on Housing Decisions, Efficiency, and Equity.” In A. Auerbach and M. Feldstein, eds.,Handbook of Public Economics, Amsterdam: North-Holland, 1985.
Seko, M. “An Econometric Analysis of The Japanese Housing Market: Market Imperfections and Policy Distortions.” Unpublished doctoral disseration, Keio University, 1990a.
Seko, M. “Nonlinear Budget Costraints and Estimation: Effects of Subsidized Home Loans on Floor Space Decisions and Efficiency in Japan.” Paper presented at the Thirty-Seventh North American Regional Science Meetings, Boston, November 1990b.
Seko, M. “The Effect Of Inflation On Japanese Homeownership Rates: Evidence From Time-Series.”The Economic Studies Quarterly 42(2) (1991) 155–163.
Seko, M. “Financing Housing in Japan.” In Y. Noguchi and J. Poterba eds.,The Economics of Housing in Japan and the United States. Chicago: The NBER and the Unversity of Chicago Press (forthcoming).
Yoshikawa, H., and Ohtake, F. “An Analysis of Female Labor Supply, Housing Demand and The Saving Rate in Japan.”European Economic Review 33 (1989) 997–1022.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Seko, M. Effects of subsidized home loans on housing decisions and efficiency in Japan: Tradeoff between quality and quantity. J Real Estate Finan Econ 6, 5–23 (1993). https://doi.org/10.1007/BF01098426
Issue Date:
DOI: https://doi.org/10.1007/BF01098426