Effective housing demand in Mumbai (Bombay) metropolitan region

Housing policy formulation should be informed by a careful understanding of the behaviour of the urban housing market, as reflected by housing demand behaviour. Such basic information is important, not only for improved proje ct design but also for the development of better sector-wide policies. The overall analysis in this paper stresses the importance of prices and income on the demand for housing in Mumbai metropolitan region, Estimates of hous ing demand function are given. In our analysis, we account for rent control in Mumbai which distorts rents. The results indicate that housing demand i s elastic with respect to income and price. The income and price elasticiti es are around 1 and -1 respectively. We also estimate income and price elas ticities for different income classes. The paper concludes with policy pres criptions.