Macro-analysis of the housing rental market within the urban hierarchy based on the DPW four-sector model (Approach: GVAR)

Document Type : RESEARCH PAPER

Authors

1 PhD in Urban and Regional Economics, University of Isfahan, Isfahan, Iran

2 Assistant Professor of Economics, Department of Economics, Faculty of Humanities, University of Zanjan, Zanjan, Iran

3 . Assistant Professor of Economics, Department of Economics, Faculty of Humanities, University of Zanjan, Zanjan, Iran

Abstract

As a terminal for reflecting consumer demand and household welfare, the rental housing market is a multidimensional phenomenon deeply intertwined with the asset sector, construction costs, and credit flows. Within the context of Iran’s urban system, rental market fluctuations exhibit complex behavior driven by structural heterogeneities and asymmetric spatial spillovers between the capital and other regions. Accordingly, aiming to analyze the macroeconomic dynamics of the rental housing market within Iran’s urban hierarchy, this study integrates the DiPasquale–Wheaton (DPW) interactive framework with a Global Vector Autoregression (GVAR) approach. In this specification, the dynamics of the rent index are modeled based on the simultaneous interaction of four sub-markets (rental, asset, construction, and credit) for Tehran, large cities, and small cities over the period from 1991 to 2024. To this end, annual data for these four markets were collected from the Central Bank of the Islamic Republic of Iran for the aforementioned period.
Generalized Impulse Response Function (GIRF) results indicate that Iran’s housing system lacks a symmetric wave diffusion pattern across urban strata; the relationship between Tehran and large cities demonstrates no significant short-term co-movement, whereas a positive shock in Tehran’s rental market is associated with a short-term decline in rent growth in small cities (spatial divergence). This heterogeneous and asymmetric pattern stems from disparities in demand structures and household financial capacity between the capital and the periphery, thereby rejecting the hypothesis of a unified spillover. Consequently, the application of uniform credit and regulatory policies at the national level is ineffective; policymakers should adopt a spatially differentiated approach tailored to each region’s position within the urban hierarchy

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References

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Stable Economy Journal
Volume 7, Issue 3 - Serial Number 24
October 2026
Pages 185-222

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