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An investigation of housing affordability in the UK regions

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  • Alberto Montagnoli

    ()
    (Department of Economics, University of Stirling)

  • Jun Nagaysu

    ()
    (Graduate School of Systems & Information engineering, University of Tsukuba, Japan)

Abstract

The housing market has been extensively investigated in the literature; however, there is a lack of understanding of the fundamentals affecting housing affordability across UK regions as measured by the price to income ratio. The aim of this paper is twofold; firstly we calculate the affordability ratio based on individuals' incomes. Second we set off to ask which socio-economic factors could affect this ratio. The analysis finds a strong influence coming from the mortgage rate, the residents' age and academic qualifications. We also report a positive and significant effect from foreign capital coming to the UK. Finally, we record a non-negligible degree of heterogeneity across the twelve regions.

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Bibliographic Info

Paper provided by University of Strathclyde Business School, Department of Economics in its series Working Papers with number 1316.

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Length: 31 pages
Date of creation: Aug 2013
Date of revision:
Publication status: Published
Handle: RePEc:str:wpaper:1316

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Keywords: House market; affordability index; heterogeneity; panel data;

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  1. Karl E. Case & Robert J. Shiller, 2003. "Is There a Bubble in the Housing Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 299-362.
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