Agent-Based Simulation of Housing Price Volatility: The Impact of Speculative Behavior on Housing Market Dynamics (Case Study: Shiraz city)

Document Type : Research Article

Authors

1 PhD Student in Economics, Department of Economics, Faculty of Economic, Shiraz Univercity, Shiraz, Iran.

2 Associate Professor, Department of Economics, Faculty of Economic, Shiraz Univercity, Shiraz, Iran (Corresponding Author).

Abstract

One of the most important concerns of housing policymakers worldwide is the emergence of a price volatility. There are two types of demand, including consumption and speculation, and speculators can both cause the housing market to prosperity by increasing transactions at the house market, and also can increase price fluctuations in the housing market by stimulating inflationary expectations. The aim of the present study is to simulate a housing price volatility and examine the effect of speculation on the housing price volatility in the city of Shiraz. For this purpose, an agent-based model was used, considering four active agents in the housing market, including the seller, the buyer (sellers and buyers are present in the market with two motives of personal consumption and speculation), the developer, and real estate. Calibrated with data up to early 2022, the model simulates scenarios with varying proportions of speculative buyers, from 100% to 0%, over an eight-year forecast horizon ending in 2030. Results show that reducing speculative participation consistently decreases volatility magnitude, with the largest reduction—approximately 25%—occurring when speculators comprise 60% of buyers. 

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References

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Journal of Applied Economics Studies in Iran
Volume 15, Issue 57
May 2026
Pages 271-300

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