Demand for residential land: The economic cycle influence

Abstract

The interplay between the demand for land and the economic cycle, in particular the interest rates, has changed significantly within the space of three years. The period before COVID was mostly characterised by a moderate interest rate environment, while the quick-acting response from Central Banks at the onset of the pandemic lowered the rates significantly. Currently, most interest rates have returned to moderate and higher levels, which has implications for the demand for residential land use. This study aims to examine the interplay between residential land demand and interest rate movements through economic and space demand modelling. The results reveal a substantial change for land demand through housing typology shifts and provide policy recommendations for city development in changing interest rates environments.