Asian Journal of Probability and Statistics

This study examined the complex relationship between environmental regulation policies, foreign direct investment (FDI), and housing affordability in urban real estate markets over a ten-year period (2014–2023) with the environmental regulation index as the independent variable. Utilizing a normal-power regression model, the analysis integrates macroeconomic indicators, including property tax rates, interest rates, inflation, unemployment, and government spending to control for broader market influences. The results revealed that stricter environmental regulations are associated with increases in average housing prices, primarily due to their impact on construction costs and development constraints. Meanwhile, FDI shows a dual effect: in some cases, it stimulates housing supply and infrastructure development, but in others, it drives up property values, particularly in high-demand urban centers, thereby contributing to reduced affordability. Diagnostic tests confirm the robustness of the model, with an R² of 0.7984 and satisfactory forecast accuracy. The findings underscored the need for integrated policy frameworks that reconcile the goals of sustainability, economic growth, and social inclusion. The study provides valuable insights for urban planners, housing policymakers, and international development agencies.