The growing population has led to an increasing demand for housing in Magelang City,
Indonesia, especially for the lower income societies. Despite the efforts of the local
government to provide housing aid through vertical housing, the demand for vertical houses
is still relatively low, proven by the low occupancy level of the current available vertical
houses. This paper applies SEM to analyze the gap between vertical housing supply and
demand in Magelang City, Indonesia. The data is gathered using questionnaires distributed to
100 respondents as the target of housing aid in Magelang City. The analysis is conducted
using four latent variables: social economy, perception, promotion and decision and applying
Confirmatory Factor Analysis (CFA) with additional three variables in the supply side: price,
facilities and occupancy. This paper shows that from the demand side, the societies’ decision
in choosing vertical house is affected by their perception on vertical houses. Meanwhile, from
the supply side the occupancy level of vertical house is affected by its facilities. These two
variables then explain the gap between demand and supply of vertical housing in Magelang
City.