Assessing the impact of macroeconomic factors on the efficiency of Taiwan’s real estate firms using stochastic frontier analysis

Abstract

This study quantifies the technical efficiency of resource utilization in the real estate industry and evaluates the impact of macroeconomic factors on the industry’s operational performance. Recommendations are provided for government agencies to formulate appropriate real estate policies to ensure housing equity and justice. The study employs stochastic frontier analysis (SFA) to measure the operational efficiency of real estate companies in Taiwan from 2004 to 2023 and to assess the influence of macroeconomic factors. The findings indicate that (1) the average operational efficiency of Taiwan’s real estate industry is 0.88; (2) increasing operating costs can enhance revenue; (3) higher operating expenses can improve market competitiveness; (4) excessive fixed assets lead to a decline in operational efficiency; (5) rising gross domestic product (GDP) and mortgage rates contribute to operational inefficiency; (6) rising construction costs may be passed on to consumers, driving up housing prices; and (7) the operational performance of the real estate industry is influenced by macroeconomic factors. The government should leverage private resources to develop and strengthen the real estate market, plan policies and goals for the sustainable development of the real estate industry, and provide high-quality living environments.