Markovian decision approach in housing policy

This article includes an empirical study of the housing market using the statistical method of Markov Process. The first phase of the study is devoted to measuring the filtering process in a selected neighborhood by estimating probabilities of transition from one income group to another, over the period 1949–1969 using four-year intervals. The estimated transition probabilities are then used to forecast occupancy structure for different periods and the suitability of applying the Markov Process for long term policy analysis in housing is examined. The final phase of the study includes an examination of steady state occupancy structure by various income categories of household. The study indicates a fruitful application of the Markov Process in long term housing policy analysis.