Abstract: This research aims to test the housing price dynamics when considering heterogeneous boundedly rational expectations such as naive expectation, adaptive expectation and biased belief. The housing market is investigated as an evolutionary system with heterogeneous and competing expectations. The results show that the dynamics of the expected housing price varies substantially when heterogeneous expectations are considered together with some other endogenous factors. Simulation results explain some stylized phenomena such as equilibrium or oscillation, convergence or divergence, and over-shooting or under-shooting. Furthermore, the results suggest that variation of the proportion of groups of agents is basically dependent on the selected strategies. It also indicates that control policies should be chosen carefully in consistence with a unique real estate market during a unique period since certain parameter portfolio may increase or suppress oscillation.

Key words: evolutionary system, housing price dynamics, heterogeneous expectations