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This paper explores the properties of dynamic aggregate housing models. In conventional models, in response to demand shocks the primary adjustment mechanism is through prices and changes in housing supply. However, the size of the supply response depends on the price elasticity of supply and in countries such as the UK where the elasticity is low, house prices can rise sharply, worsening affordability. But this ignores the roles of housing risk and credit markets which affect the user cost of capital and the paper demonstrates that models that explicitly introduce a housing risk premium have an additional price stabiliser. The importance is shown through stochastic simulations; these simulations also demonstrate that conventional models used for forecasting and policy analysis may overstate future house price growth. [ABSTRACT FROM AUTHOR]

This paper constructs a housing market model to analyse conditions for different generations of households in the UK. Previous policy work has suggested that baby-boomers have benefitted at the expense of younger generations. The model relies on a form of financial accelerator in which existing homeowners reinvest a proportion of the capital gains on moving home. The model is extended to look at homeownership probabilities. It also explains why an increasing share of mortgages has gone to existing owners, despite market liberalisation and securitisation. In addition, the model contributes to the explanation of volatility. [ABSTRACT FROM PUBLISHER]

This study is concerned with two issues: first, the factors that determine the local location decisions of migrants within the UK and, second, the impact of migrant communities on domestic housing markets. Most migration studies are concerned with the determinants of international migration to the UK. Few look at the drivers of the spatial distributions once migrants arrive. However, migrant housing is primarily a local, urban problem and, arguably, the main issue is the spatial concentrations, rather than absolute numbers. The UK has experienced waves of migrants throughout its history and these are well documented in the censuses since the mid 19th century. A feature of the study is its long-run perspective, which allows the examination of the characteristics of the different waves and shows the high degree of persistence in spatial structures. The second part of the study examines why there is little evidence that migration has much effect on house prices, despite the popular perception that the impact is important. The study demonstrates that the nature of housing market adjustment is more complex than price indicators alone would suggest. Adjustment also takes place through changes to household formation and through the mobility of domestic residents, which mitigate the price effects. [ABSTRACT FROM AUTHOR]

This paper considers the impact of existing land use patterns on housing supply price elasticities in local areas of England, under existing planning policies. The paper demonstrates that, despite common national planning policies, local supply responses to market pressures vary considerably, because of differences in historical land uses. The study area covers the Thames Gateway and Thames Valley, which lie to the east and west of London respectively. However, whereas the latter is one of the wealthiest areas of England, the former includes some of the highest pockets of deprivation and was a government priority area for increasing housing supply. Due to differences in historical land use and geography, the price elasticity in the least constrained area is approximately six times higher than the most constrained. [ABSTRACT FROM PUBLISHER]

In the mid 1990s, Meen set out a series of propositions concerning the relationship between housing and the macro economy during the 1980s and early 1990s. This paper provides 10 further propositions for the early years of this century, taking into account recent research and policy concerns. The first five propositions concern housing market risk, whereas the remaining issues deal with the sustainability of homeownership. The empirical evidence presented finds that there is limited evidence for bubbles over the past 10 years and models of house prices are stable. Furthermore, housing possessions are unlikely to fall to the levels observed in the early 1980s. It is also suggested that the private rental market may not expand at the same rate as in the past 10 years, but there are risks to homeowners down the income distribution. Finally, the main beneficiaries of new affordability targets may be existing rather than new households. [ABSTRACT FROM AUTHOR]

The Barker Review of Housing Supply was set up in order to address some of the weaknesses that might arise if the UK were to join EMU. The Final Report has quickly become one of the most important documents in housing policy for many years. Broadly, the Review examined the reasons for the weakness of English housing supply. For example, during the 1990s, despite the boom in house prices, private housing construction hardly grew at all. The weakness of supply is one reason why house prices in the UK have risen much faster than the European average. In response to the Review's conclusion that the land-use planning system is the main cause of supply shortages, England will be introducing affordability targets. Regional planning authorities will be required to release more land if they expect targets not to be met. Economic analysis and models will become central to the assessment. The Barker Review provides a good example of how economic analysis can be used to inform the policy debate. This paper looks at the economics underlying the Barker Review, concentrating on an analysis of supply elasticities and the required increases in construction to meet price targets. The latter has been particularly controversial since, under some assumptions, the analysis implies that housing construction in England needs to be approximately doubled in order to bring house price inflation down to European levels. [ABSTRACT FROM AUTHOR]

This paper constitutes the first of two interrelated studies and is concerned with the relationship between house prices and transactions. Using aggregate time–series data, we find a strong relationship in Britain between the two variables, but the relationship changed during the 1990s. Transactions became much lower. We suggest that structural changes in macroeconomic relationships are increasingly likely to occur in a world of greater inequality and our results are one symptom. We argue that macroeconomic estimation needs to be complemented by careful microeconomic analysis. The second study, also appearing in this issue, therefore examines the microeconomic aspects of the issue. [ABSTRACT FROM AUTHOR]

Most empirical analysis of property development treats the subcomponents of the construction industry as independent. For example, models of housing construction typically do not consider any relationship with industrial or commercial construction. In fact, there are a number of ways in which changes over time may be interdependent. For example, economic theory suggests that, under some conditions, housing investment crowds out industrial and commercial investment. In general, therefore, if there are interdependencies, the presumption is that the relationship is negative. Here the relationship between new housing and industrial construction is concentrated on. It is found that, in the long run, based on Johansen tests for Britain since the sixties, the relationship is positive – movements are complementary. At first sight, this result is counter-intuitive, at least in an aspatial setting. But, in a spatial setting, the results are consistent with the view that (i) 'jobs move to workers' as relocating firms seek out highly skilled workers who, in turn, search for high quality housing locations; (ii) particularly in SE England, which has a high rate of new firm formation, fast growing new firms are started by high potential entrepreneurs close to where they live. Therefore, new housing and industrial development are self-reinforcing. [ABSTRACT FROM AUTHOR]

Examines issues related to housing economics in Great Britain. Creation of a model of housing market; Components of the housing market model; Use of the model in assessing housing market efficiency; Relationship between house prices and property transactions; Role of monetary policy in the generation of housing cycles and stability.

In Britain, house prices exhibit a distinct spatial pattern over time, rising first in a cyclical upswing in the south-east and, then, spreading out over the rest of the country. This is known as the ripple effect. Although previous studies have shown that, statistically, the ripple effect is a valid representation of the data, providing convincing economic explanations is less straightforward. Some studies have concentrated on the role of migration; others argue that the pattern reflects different regional growth rates. This paper suggests that structural differences in regional housing markets are important. A new model of house prices for the regions in Great Britain is devised and estimated in which the coefficients exhibit non-random spatial patterns. The coefficients reflect structural differences between the regions and it is shown, through simulations, that the model can generate a ripple effect irrespective of regional growth patterns. [ABSTRACT FROM AUTHOR]

Examines the aggregate housing market implications of labor market change in Great Britain. Structural change and the nature of labor and credit market constraints; Nature of aggregation conditions; Aggregate structural change in national house prices in the 1990s; Labor market change and post-1990 house prices.

Explores the nature of spatial interactions in Great Britain regional house prices and housing starts using methods taken from the spatial econometrics literature and from cointegration. Extent to which markets are homogeneous, dependent and convergent across the English regions; Spatial dependence in terms of house prices and starts; Housing since the early 1970s.

During the last ten years, macroeconomists have increasingly come to realise that there are important interactions between housing and the wider economy. In some cases, this realisation has come too late to avoid the severe oscillations in the economy that have characterised the period since the mid-1980s. This paper uses a macroeconometric model, specifically designed to capture the interactions, in order to reflect on the experience of the 1980s and early 1990s and to draw theoretical, empirical and policy conclusions in terms of ten propositions. [ABSTRACT FROM AUTHOR]

Presents a study that aimed to measure mortgage market rationing directly without the use of proxy measures and methods in estimating demand and supply functions for markets in disequilibrium. Changes that have taken place in the mortgage market of Great Britain; Effects for personal sector housing and consumption decisions; Description of a proposed method of measuring rationing which incorporates regime switching.

The article examines the effects of mortgage rationing on the level of housing demand and house prices in Great Britain. It derives the housing user cost of capital in the absence of credit market constraints. The article also discusses how inflation affects house prices. The effects of a change in the inflation rate on the mortgage market and nominal interest rates are examined. The article specifies a model to determine real house prices and results are presented.