A System Dynamics Model for Determining Pre-Sale Policies to Facilitate Housing Production and Achieve Financial Benefits for Developers and Buyers

Abstract

Long-term delays to complete residential units, due to lack of adequate and punctual financing, is considered as a developer's problem, in the process of housing production. In this regard, the present study, with the consideration of the challenges that obstacle the efficient pre-sale of residential units, aims to determine the pre-sale policies of housing by providing a model based on the system dynamics approach in order to provide sufficient and punctual financial resources, reduce delays in completion, reduce opportunity cost and to achieve a balance between developers’ and buyers’ profit. After making a dynamic model and validating it, 48 scenarios consisting of the states of five lever variables were simulated and after analyzing the results, improvement policies which include four alternatives were extracted. The results indicate that to produce the residential units with average prices, whether the percentage offered of area for initial pre-sale is 0/3, the initial pre-sale discount coefficient relative to the price of the completed unit is 0/06 and the down payment coefficient is 0/3, from which the mentioned variables will lead to a significant reduction in completion delays and opportunity cost, and also will balance the profit of both developers and buyers.

Keywords

• housing pre-sale
• financing of housing production
• reduction of delays in housing production
• achieving the interests of developers and buyers
• system dynamics