Skip to main content
SpringerLink
Log in

Housing Market Theory

  • Chapter
  • First Online:
Cycles in the UK Housing Economy

  • 627 Accesses

Abstract

In this chapter, the monocentric urban model due to DiPasquale and Wheaton (1996) is outlined with a view to explain how prices are maintained across an urban housing area. This is extended across space, buyers, and quality tiers. A discussion of cycles in economic variables in general and property in particular follows.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 44.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 59.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Ali, K., Olfert, M., & Partridge, M. (2011). Urban footprints in rural Canada: Employment spillovers by city size. Regional Studies, 45(2), 239–260.

    Article  Google Scholar 

  • Ando, A., & Modigliani, F. (1963). The ‘life-cycle’ hypothesis of saving: Aggregate implications and tests. American Economic Review, 53(1), 55–84.

    Google Scholar 

  • Aoki, K., Proudmand, J., & Vlieghe, G. (2004). House prices, consumption and monetary policy: A financial accelerator approach. Journal of Financial Intermediation, 13, 414–435.

    Article  Google Scholar 

  • Armstrong, H., & Taylor, J. (2000). Regional economics and policy. London: Harvester Wheatsheaf.

    Google Scholar 

  • Artis, M. (2006). What do we know about currency unions. Bank of England Quarterly Bulletin, (Summer), 243–255.

    Google Scholar 

  • Artis, M., & Zhang, W. (1997). International business cycles and the ERM: Is there a European business cycle? International Journal of Finance and Economics, 2, 1–16.

    Article  Google Scholar 

  • Artis, M., Chouliarakis, G., & Harischandra, P. (2011). Business cycle synchronisation since 1880. Manchester School, 79(2), 173–207.

    Article  Google Scholar 

  • Benito, A. (2006, March). How does the down-payment constraint affect the UK housing market (Bank of England Working Paper 294).

    Google Scholar 

  • Bennett, R., Hanning, R., & Wilson, A. (1985). Spatial structure, spatial interaction, and their integration: A review of alternative models. Environment and Planning A, 17, 625–645.

    Article  Google Scholar 

  • Bernanke, B., & Gertler, M. (1989). Agency costs, net worth, and business fluctuations. American Economic Review, 79(1), 14–31.

    Google Scholar 

  • Bogart, W. (1998). The economics of cities and suburbs. Upper Saddle River, NJ: Prentice Hall.

    Google Scholar 

  • Borgatti, S., & Everett, M. (1999). Models of core/periphery structures. Social Networks, 21(4), 375–395.

    Article  Google Scholar 

  • Brown, G. (1984). Real estate cycles alter the valuation perspective. Appraisal Journal, 5(4), 539–549.

    Google Scholar 

  • Brühl, M., & Lizieri, C. (1994). Centralism vs. federalism: Implications for regional diversification. Journal of Property Valuation and Investment, 12(1), 59–73.

    Article  Google Scholar 

  • Burns, L. (1987). Regional economic integration and national economic growth. Regional Studies, 21, 327–339.

    Article  Google Scholar 

  • Campbell, J., & Mankiw, N. G. (1991). The response of consumption to income: A cross-country investigation. European Economic Review, 35(4), 723–756.

    Article  Google Scholar 

  • Carroll, C. (2001). A theory of the consumption function, with and without liquidity constraints. Journal of Economic Perspectives, 15(3), 23–45.

    Article  Google Scholar 

  • Clayton, J. (1998). Further evidence on real estate market efficiency. The Journal of Real Estate Research, 15(1/2), 41–57.

    Google Scholar 

  • Cutler, J. (1995). The housing market and the economy. Bank of England Quarterly Bulletin, August, 260–269.

    Google Scholar 

  • De Goei, B., Burger, M., Van Oort, F., & Kitson, M. (2010). Functional polycentrism and urban network development in the Greater South East, United Kingdom: Evidence from commuting patterns, 1981–2001. Regional Studies, 44(9), 1149–1170.

    Article  Google Scholar 

  • De Grauwe, P. (2003). The economics of monetary integration (5th ed.). Oxford: OUP.

    Google Scholar 

  • De Groot, B., & Franses, P. (2008). Stability though cycles. Technological Forecasting and Social Change, 75, 301–311.

    Article  Google Scholar 

  • Derudder, B., Taylor, P., Witlox, F., & Catalano, G. (2003). Hierarchical tendencies and regional patterns in the world city network: A global urban analysis of 234 cities. Regional Studies, 37(9), 875–886.

    Article  Google Scholar 

  • Dicks, M. (1989). The housing market. Bank of England Quarterly Bulletin, February, 66–75.

    Google Scholar 

  • DiPasquale, D., & Wheaton, W. (1996). Urban economics and real estate markets. Englewood Cliffs, NJ: Prentice Hall.

    Google Scholar 

  • Duranton, G., & Puga, D. (2005). From sectoral to functional urban specialization. Journal of Urban Economics, 57(2), 343–370.

    Article  Google Scholar 

  • Dusansky, R., & Wilson, R. (1993). The demand for housing: Theoretical considerations. Journal of Economic Theory, 61, 120–138.

    Article  Google Scholar 

  • Fatas, A. (1997). Countries or regions? Lessons from the EMS experience. European Economic Review, 41, 743–751.

    Article  Google Scholar 

  • Fernández-Villaverde, J., & Krueger, D. (2002). Consumption over the life cycle: Some facts from the consumer expenditure survey data (NBER Working Paper 9382). http://www.nber.org/papers/w9382. Accessed 1 Dec 2014.

  • Fernandez, R., Hofman, A., & Albers, M. (2016). London and New York as a safe deposit box for the transnational wealth elite. Environment and Planning A, 48(12), 2443–2461.

    Article  Google Scholar 

  • Friedmann, J. (1973). Urbanisation, planning and national development. Beverly Hills: Sage.

    Google Scholar 

  • Godfrey, B., & Zhou, Y. (1999). Ranking world cities: Multinational corporation and the global urban hierarchy. Urban Geography, 20(3), 268–281.

    Article  Google Scholar 

  • Gordon, R. (2013). Macroeconomics (12th ed.). Prentice Hall: New York.

    Google Scholar 

  • Grover, R., & Grover, C. (2014). Property bubbles—A transitory phenomenon. Journal of Property Investment and Finance, 32(2), 208–222.

    Article  Google Scholar 

  • Hall, R. (1978). Stochastic implications of the life cycle-permanent income hypothesis: Theory and evidence. Journal of Political Economy, 86(6), 971–987.

    Article  Google Scholar 

  • Harrison, F. (2005). Boom bust: House prices, banking and the depression of 2010. London: Shepheard-Walwyn.

    Google Scholar 

  • Herbert, D., & Thomas, C. (1995). Cities in space: City as place (2nd ed.). David Fulton: London.

    Google Scholar 

  • Higgins, B. (1983). From growth poles to systems of interaction in space. Growth and Change, 14(4), 3–13.

    Article  Google Scholar 

  • Hirschman, A. (1958). The strategies of economic development. New Haven: Yale University Press.

    Google Scholar 

  • Holly, S., Pesaran, H., & Yamagata, T. (2011). The spatio-temporal diffusion of house prices in the UK. Journal of Urban Economics, 69(1), 2–23.

    Google Scholar 

  • Hoover, K. (2012). Applied intermediate macroeconomics. New York, NY: CUP.

    Google Scholar 

  • Iacoviello, M., & Pavan, M. (2013). Housing and debt over the life cycle and over the business cycle. Journal of Monetary Economics, 60, 221–238.

    Article  Google Scholar 

  • Jones, C., & Leishman, C. (2006). Spatial dynamics of the housing market: An interurban perspective. Urban Studies, 43(7), 1041–1059.

    Article  Google Scholar 

  • Jordà, Ã’., Schularick, M., & Taylor, M. (2016). The great mortgaging: Housing finance, crises and business cycles. Economic Policy, 31(85), 107–152.

    Article  Google Scholar 

  • Kiyotaki, N., & Moore, J. (1997). Credit cycles. Journal of Political Economy, 105(2), 211–248.

    Article  Google Scholar 

  • Krugman, P. (1991). Geography and trade. Cambridge, MA: MIT Press.

    Google Scholar 

  • Kuang, P. (2014). A model of housing and credit cycles with imperfect market knowledge. European Economic Review, 70, 419–437.

    Article  Google Scholar 

  • Leamer, E. (2007). Housing is the business cycle (Working Paper 13428, NBER).

    Google Scholar 

  • Leamer, E. (2015). Housing is the business cycle: What survives the lessons of 2008–09? Journal of Money Credit and Banking, 47(1), 43–50.

    Article  Google Scholar 

  • Limtanakool, N., Dijst, M., & Schwanen, T. (2007). A theoretical framework and methodology for characterising national urban systems on the basis of flows of people: Empirical evidence for France and Germany. Urban Studies, 44(11), 2123–2145.

    Article  Google Scholar 

  • Limtanakool, N., Schwanen, T., & Dijst, M. (2009). Developments in the Dutch urban system on the basis of flows. Regional Studies, 43(2), 179–196.

    Article  Google Scholar 

  • Madsen, J. (2012). A behavioural model of house prices. Journal of Economics Behaviour & Organisation, 82, 21–38.

    Article  Google Scholar 

  • Marchand, C. (1981). Maximum entropy spectra and the spatial and temporal dimensions of economic fluctuations in an urban system. Geographical Analysis, 13, 95–116.

    Article  Google Scholar 

  • McCann, P. (2001). Urban and regional economics. Oxford: Oxford University Press.

    Google Scholar 

  • McCombie, J. (1988). A synoptic view of regional growth and unemployment: II—The Post-Keynesian theory. Urban Studies, 25, 399–417.

    Article  Google Scholar 

  • McDonald, J. (1985). Expectations and urban housing prices. Urban Studies, 22, 543–549.

    Article  Google Scholar 

  • Meen, G. (1999). Regional house prices and the ripple effect: A new interpretation. Housing Studies, 14(6), 733–753.

    Article  Google Scholar 

  • Meen, G. (2011). The economic consequences of mortgage debt. Journal of Housing and the Build Environment, 26(3), 263–276.

    Article  Google Scholar 

  • Montagnoli, A., & Nagayasu, J. (2015). UK house price convergence clubs and spillovers. Journal of Housing Economics, 30, 50–58.

    Article  Google Scholar 

  • Morrow-Jones, H., & Wenning, M. (2005). The housing ladder, the housing life-cycle and the housing life-course: Upward and downward movement among repeat home-buyers in a US metropolitan housing market. Urban Studies, 42(10), 1739–1754.

    Article  Google Scholar 

  • Muellbauer, J. (2007). Housing, credit and consumer expenditure. In Proceedings-Economic Policy Symposium-Jackson Hole (pp. 267–334). Kansas City: Federal Reserve Bank of Kansas City.

    Google Scholar 

  • Muellbauer, J., & Murphy, A. (2008). Housing markets and the economy: The assessment. Oxford Review Economic Policy, 24(1), 1–33.

    Article  Google Scholar 

  • Mundell, R. (1961). A theory of optimal currency areas. American Economic Review, 51, 657–664.

    Google Scholar 

  • Myrdal, G. (1957). Economic theory and underdeveloped regions. London: Duckworth.

    Google Scholar 

  • Olfert, M., & Stabler, J. (1999). Multipliers in a central place hierarchy. Growth and Change, 30, 299–302.

    Article  Google Scholar 

  • Palley, T. (2004). Debt, aggregate demand, and the business cycle: An analysis in the spirit of Kaldor and Minsky. Journal of Post-Keynesian Economics, 16(3), 371–389.

    Google Scholar 

  • Palley, T. (2010). The limits of Minsky’s financial instability hypothesis as an explanation of the crisis. Monthly Review, 61(11), 28–43.

    Article  Google Scholar 

  • Palley, T. (2011). A theory of Minsky super-cycles and financial crises. Contributions to Political Economy, 30(1), 31–46.

    Article  Google Scholar 

  • Partridge, M., Rickman, D., Ali, K., & Olfert, M. (2009). Do new economic geography agglomeration shadows underlie current population dynamics across the urban hierarchy? Papers in Regional Science, 88(2), 445–466.

    Article  Google Scholar 

  • Perroux, F. (1950). Economic space, theory and applications. Quarterly Journal of Economics, 64, 89–104.

    Article  Google Scholar 

  • Persaud, A. (2016). Breaking the link between housing cycles, banking crises, and recession. City Political Economy Research Centre. https://www.city.ac.uk/__data/assets/pdf_file/0019/312571/CITYPERC-WPS-201602.pdf. Accessed 2 Jan 2017.

  • Phang, S. (2004). House prices and aggregate consumption: Do they move together? Evidence from Singapore. Journal of Housing Economics, 13(2), 101–119.

    Article  Google Scholar 

  • Pred, A. (1966). The spatial dynamics of urban growth in the United States, 1800–1914. Cambridge, MA: MIT Press.

    Google Scholar 

  • Pred, A. (1980). Urban growth and city systems in the United States, 1840–1860. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Pritchett, C. (1984). Forecasting the impact of real estate cycles on investment. Real Estate Review, 13(4), 85–89.

    Google Scholar 

  • Pyhrr, S., Roulac, S., & Born, W. (1999). Real estate cycles and their strategic implications for investors and portfolio managers in the global economy. The Journal of Real Estate Research, 18(1), 7–68.

    Google Scholar 

  • Richardson, H. (1978). Regional and urban economics. Middlesex: Penguin.

    Google Scholar 

  • Scanlon, K., & Whitehead, C. (2011). The UK mortgage market: Responding to volatility. Journal of Housing and the Build Environment, 26, 277–293.

    Article  Google Scholar 

  • Scott, A. (1998). Regions and the world economy. Oxford: Oxford University Press.

    Google Scholar 

  • Smith, L., & Ho, M. (1996). The relative price differential between higher and lower priced homes. Journal of Housing Economics, 5, 1–17.

    Article  Google Scholar 

  • Smith, B., & Tesarek, W. (1991). House prices and regional real estate cycles: Market adjustments in Houston. Real Estate Economics, 19(3), 396–416.

    Article  Google Scholar 

  • Sommervoll, D., Borgersen, T.-A., & Wennemo, T. (2010). Endogenous housing market cycles. Journal of Banking & Finance, 34(3), 557–567.

    Article  Google Scholar 

  • Spotton, B. (1997). Financial instability reconsidered: Orthodox theories verses historical facts. Journal of Economic Literature, 31, 175–195.

    Google Scholar 

  • Stein, J. (1995). Prices and trading volume in the housing market: A model with downpayment effects. The Quarterly Journal of Economics, 110, 379–405.

    Article  Google Scholar 

  • Storper, M. (1995). The resurgence of regional economies, ten years later: The region as a Nexus of untraded interdependencies. European Urban and Regional Studies, 2, 191–222.

    Article  Google Scholar 

  • Storper, M. (1997). The regional world. London: Guilford Press.

    Google Scholar 

  • Storper, M., & Walker, R. (1989). The capitalist imperative. Territory, technology, and industrial growth. Blackwell: Oxford.

    Google Scholar 

  • Terluin, I. (2003). Differences in economic development in rural regions of advanced countries: An overview and critical analysis of theories. Journal of Rural Studies, 19, 327–344.

    Article  Google Scholar 

  • Van Duijn, J. J. (1983). The long wave in economic life. London: Allen & Unwin.

    Google Scholar 

  • Wood, R. (2003). The information of regional house prices: Can they be used to improve national house price forecasts? Bank of England Quarterly Bulletin, 43(3), 304–314.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Lincoln University, Lincoln, United Kingdom

    David Gray

Authors
  1. David Gray
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to David Gray .

Rights and permissions

Reprints and permissions

Copyright information

© 2017 The Author(s)

About this chapter

Cite this chapter

Gray, D. (2017). Housing Market Theory. In: Cycles in the UK Housing Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-63348-0_3

Download citation

  • DOI: https://doi.org/10.1007/978-3-319-63348-0_3

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-319-63347-3

  • Online ISBN: 978-3-319-63348-0

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation