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Exuberance in the U.K. Regional Housing Markets

Author

Listed:
  • Alisa Yevgenyevna Yusupova
  • Efthymios Pavlidis
  • Ivan Paya
  • David Alan Peel

Abstract

We combine the estimation of a structural model with inference based on recently developed recursive unit root tests to analyse the behaviour of regional real estate markets in the U.K. over the last four decades. We find two episodes, the late 1980s and the early and mid-2000s, when all regional house prices experienced explosive dynamics above and beyond factors such as housing supply relative to demographics, income, regional spillovers and credit availability. This is the first econometric analysis to provide evidence that would endorse the view that ‘bubbles’, with a particular spatial pattern, are a feature of UK regional housing markets.

Suggested Citation

  • Alisa Yevgenyevna Yusupova & Efthymios Pavlidis & Ivan Paya & David Alan Peel, 2017. "Exuberance in the U.K. Regional Housing Markets," Working Papers 168117137, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:168117137
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    References listed on IDEAS

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    2. Xie, Zixiong & Chen, Shyh-Wei & Wu, An-Chi, 2019. "Asymmetric adjustment, non-linearity and housing price bubbles: New international evidence," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    3. Iancu Laura Andreea & Croicu Andreea Elena & Rogojan Luana Cristina, 2023. "An Investigation on Real Estate Market Dynamics and Bubble Formation Modeling," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 17(1), pages 1603-1616, July.
    4. Martínez-García, Enrique & Grossman, Valerie, 2020. "Explosive dynamics in house prices? An exploration of financial market spillovers in housing markets around the world," Journal of International Money and Finance, Elsevier, vol. 101(C).
    5. Taufiq Choudhry, 2020. "Economic Policy Uncertainty and House Prices: Evidence from Geographical Regions of England and Wales," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(2), pages 504-529, June.

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