Carga percibida de los cuidados

Many studies of US house prices are derived from an asset market model or a user cost approach (Guirguis et al., 2005; Poterba, 1984). This approach focuses mainly on the interaction between inflation, taxes and finance (see DeLeeuw & Ozanne, 1981; Diamond, 1978). The asset-market model determines house price by analyzing the relationship between the quantity of housing service demanded and the real estate user cost of housing service (Poterba, 1984). According to Malpezzi (1999), housing is viewed as ‘a composite commodity’, which generates a flow of ‘housing service’ or housing stock. Poterba (1984) used marginal rental values of service generated by a housing stock as a measurement for housing service.

The term ‘housing service’ is defined as the rental service from housing, which generates inflows of income. Pages and Maza (2003) explain that the housing service can also be used for homeowners. Dipasquale and Wheaton (1996) also explain that housing services consist of houses which are rented or purchased for occupancies. An investor, consumer and household buy housing service which is actually rented out to them for an implicit rent (Smith et al., 1988). In addition, the asset price (house price) and rents are both being determined by owner –occupants (Cheng et al., 2009).

The underlying framework for the asset market model is based on the capital theory equation where the equilibrium price of an asset is equal to the present discounted value of future net income derived from owning the asset (Diewert et al., 2009). In the context of the housing market, the model assumes that the price of a house must be equal to the present discounted value of net future service flow, which is the rental of the house (Poterba, 1984).

Equation 4.1 describes the general asset market model:

p hsg hsg

Hsg =QD +UC ……….... (4.1) Where;

p

Hsg = the price of the house

hsg

QD = the quantity demanded for housing service (real rental service)

hsg

UC = the user cost which consists of (M_r) is the mortgage rates,, ( )P_t the property taxes, (Int) income tax,, (MRc) maintenance and repair cost and (ECg) expected capital gain.

( , , , , )

hsg r t t c cg

UC = f M P In MR E ……… (4.2)

The quantity of housing service is defined as the real rental price of housing, which is the amount paid by consumer in consuming housing stock (Pain & Westaway, 1996) (see equation 4.3)

1 (1 ) hsg t QD R   =  +   ……….... (4.3) Where (1/(1 )t R

+ is the discounted real rental price (future inflow of housing service),

with R as the rental price.The unobservable of the real rental price causes many researchers (Ayuso & Restoy, 2006; Diewert et al., 2009) to use proxies, which are disposable income, demographic indicators and real interest rates in determining the demand for housing service (Pain & Westaway, 1996). Therefore, the real rental price of housing service ( )Rt is proxies with the following observable determinants illustrated in the following equation (Meen, 1990);

( , , , )

t s

R = f Y P Hsg W ……….... (4.4) Where Y = real disposable income

P = population s

Hsg = supply of houses

W = consumers’ asset wealth

In equilibrium, the user cost and real rental price should be equal. According to Poterba (1984), people use housing service until the marginal value of the housing service, which is QD_hsg(rental price) is equal to their cost( ..

The house price in the asset market model is determined by combining the housing service demanded (equation 4.3) and the real estate user cost (equation 4.2) as follows (Gallin, 2006 equation); 1 1 (1 1 t t t t t Hsg Hsg R E i δ + +  ₋  = + _{ } +  ………....(4.5) ( Where Hsg_t= house price at time t

t

R = real rental of housing service at time t t

E = expectation condition on information at time t 1

t

δ = constant rate of depreciation

The asset market model is based on the rational asset market equilibrium, where house buyers are assumed to have a perfect forecast about the future andthe deviation of the price from the equilibrium price caused by the demand or supply shock. According to this model, the movement in house price reflects the shock and adjustment mechanism and the fundamental factors are the only cause of the deviation in house prices. Other deviations in house prices are caused by the rational and efficient factors.

Many researchers (for example, Hendry, 1984; Levin & Wright, 1997; Meen, 1990, 1996) use the asset-market approach or user-cost approach to model house prices. Poterba (1984) examines the inflation effect on tax subsidies to owner occupied housing using a dynamic model of the asset market approach. The author’s results showed that a 30 % increase in US house prices in 1970s was due to the tax provision for mortgage interest deductibility. In addition, Poterba (1984) proposed two conditions which can be used to determine the steady long-run state of housing market: a demand for housing (zero capital gain) and a constant stock of housing (zero changes in housing stock).

Meen (1990) employs the user-cost approach model to examine the impact on UK housing market with mortgage rationing. Mortgage rationing is determined by the difference between the demand for mortgage and effective supply (Meen, 1990). Meen’s study shows that the mortgage demand and supply function can be identified and obtained from direct estimation of excess mortgage demand or mortgage rationing using the user-cost approach model. The author also claims that the equation used in his study has been successful in explaining both mortgage rationing (1978- 1980) and the absence of mortgage rationing (1981-1987).

According to Adams and Fuss (2010), the advantage of using the asset market approach includes the ability to model an equilibrium condition caused by the arbitrage relationship. In an arbitrage relationship, the housing rent is equal to the user cost of housing.

The drawback in the asset -market approach comes from the unobservable of rental cost charges by homeowner to themselves for the use of their houses (Diewert et al., 2009). It is thus difficult to capture the future income, as the future and people’s expectation are unpredictable. Furthermore, house prices and rents are affected by supply restriction and regulation in the real estate market, which are ignored in this approach (Ayuso & Restoy, 2006).