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Regional market size and the housing market: insights from a new economic geography model

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  • Mark Andrew

Abstract

The increased availability of information about housing and labour markets at finer spatial scales opens up possibilities for applied research to model various types of spatial relationships associated with housing affordability. The aim of this paper is to encourage empirical research to estimate the type of spatial relationships described by new economic geography (NEG) models. NEG models were designed to provide general equilibrium analysis of urban agglomeration, but may also be used to shed insights into the degree to which housing and labour markets could be integrated spatially. We extend the Helpman and Hanson NEG theoretical model by relaxing the stringent restrictions imposed on housing consumption and the size of the housing sector, so that it may be used to address the housing affordability issue. We highlight the differences that these refinements have on the implications for earnings, rents (house prices) and migration. In particular, simulations are undertaken to assess the conditions under which a responsive and non-responsive construction sector worsens or improves housing affordability and affects region size.

Suggested Citation

  • Mark Andrew, 2012. "Regional market size and the housing market: insights from a new economic geography model," Journal of Property Research, Taylor & Francis Journals, vol. 29(4), pages 298-323, July.
    • Handle: RePEc:taf:jpropr:v:29:y:2012:i:4:p:298-323
    DOI: 10.1080/09599916.2012.717101
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    References listed on IDEAS

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    1. Bode, Eckhardt & Mutl, Jan, 2010. "Testing Nonlinear New Economic Geography Models," Economics Series 253, Institute for Advanced Studies.
    2. Bernard Fingleton, 2009. "Simulating Wages and House Prices Using the NEG," Working Papers 0913, University of Strathclyde Business School, Department of Economics.
    3. Pines,David & Sadka,Efraim & Zilcha,Itzhak (ed.), 1998. "Topics in Public Economics," Cambridge Books, Cambridge University Press, number 9780521561365, Enero-Abr.
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    Cited by:

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    2. Jing Han & Ming Gao & Yawen Sun, 2019. "Research on the Measurement and Path of Urban Agglomeration Growth Effect," Sustainability, MDPI, vol. 11(19), pages 1-19, September.

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