A Quantitative Analysis of Investment in New Housing in Greece

This paper analyses empirically investment in housing in Greece using aggregate data for the period 1958-89 and a version of the flexible accelerator model of investment demand. Housing production is undertaken mainly by households aiming at private home ownership and is subject to significant fluctuations which were more pronounced in the 1980s. The estimation of the model shows that traditional determinants of housing demand, such as income and population, influence significantly investment decisions. Moreover, the dynamic specification adopted seems to have traced well the dynamic adjustment of the housing stock. Finance variables, on the other hand, were not found to affect significantly housing investment. Tests of stability indicated that estimated equations are reasonably stable over the sample period.