Housing is a complex good that is both a consumption and an investment good for homeowners, Singapore

Question 3

Housing is a complex good that is both a consumption and an investment good for homeowners. It can be defined as a vector of characteristics linked to the building, neighbourhood, and location defined in terms of accessibility relationships with the city, shops, schools, etc. The price of a house can be seen as a function of these characteristics. Based on the principles of Systems Thinking, answer the following questions to improve the practice of estimating house price:

1. Identify the variables associated with the problem (define 10 variables at least),
2. Identify the causal relationships among these variables,
3. Draw the ‘Causal Loop Diagram’ (CLD) to graphically represent these relationships, and
4. Identify the feedback loops within your CDs
5. Discuss how these feedback loops can affect the estimated price of a house