Demand for housing in the Bombay Metropolitan Region

An assessment of the housing demand functions for the Bombay Metropolitan Region has been established using a two-step econometric analysis. Regression results gathered from one of the two steps showed that the hedonic price index for different regions in Bombay is ancillary to housing, neighborhood and expenditure characteristics. It was also established that income elasticities for owners and tenants range between 0.33 and 0.38 respectively, while price elasticities for the two average about -0.21 and -0.75 correspondingly. Such figures clearly support the idea that housing demand is inelastic as regards to income and prices.