HOUSING INVESTMENT AND RESIDENTIAL LAND SUPPLY IN JAPAN - AN ASSET MARKET APPROACH

This article investigates Japan's housing market using an equilibrium market approach based on both theoretical and empirical perspectives. An equilibrium model of the housing market is developed by combining t he consumption capital asset pricing model with the supply functions o f housing and residential land as determined by the housing industry. To verify the model's results, the Japanese housing market is subseque ntly estimated via Hansen's (1982) generalized method of moments, afte r which simulations are performed that enable examination of the main factors affecting housing investment. Findings suggest that fluctuatio ns in housing investment during the 1970s occurred as a result of a de cline in productivity caused by the 1973 oil crisis, with its downward trend in the first half of the 1980s being due to the decrease in the growth rate of Japan's adult population. (C) 1997 Academic Press.