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Booms, Busts and Ripples in British Regional Housing Markets

Author

Listed:
  • Gavin Cameron

    (Dept of Economics, University of Oxford)

  • John Muellbauer

    (Nuffield College, Oxford)

  • Anthony Murphy

    (Nuffield College, Oxford)

Abstract

We present and discuss an annual econometric model of regional house prices in Britain estimated over the period 1972 to 2003. The model, which consists of a system of inverted housing demand equations, is data consistent, incorporates spatial lags and errors, has some spatial coefficient heterogeneity, has a plausible long run solution and includes a full range of explanatory variables. We use our results to explain the periods of boom and bust and the ripple effect from London house prices to house prices elsewhere. We also address the issue of whether there has been a bubble in the British housing market

Suggested Citation

  • Gavin Cameron & John Muellbauer & Anthony Murphy, 2005. "Booms, Busts and Ripples in British Regional Housing Markets," Macroeconomics 0512003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0512003
    Note: Type of Document - pdf; pages: 41
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0512/0512003.pdf
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    References listed on IDEAS

    as
    1. Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005. "Assessing High House Prices: Bubbles, Fundamentals and Misperceptions," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 67-92, Fall.
    2. Carol Alexander & Michael Barrow, 1994. "Seasonality and Cointegration of Regional House Prices in the UK," Urban Studies, Urban Studies Journal Limited, vol. 31(10), pages 1667-1689, December.
    3. Gavin Cameron & John Muellbauer, 1998. "The Housing Market and Regional Commuting and Migration Choices," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(4), pages 420-446, September.
    4. Moira Munro & Yong Tu, 1996. "The Dynamics Of Uk National And Regional House Prices," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 8(2), pages 186-201, July.
    5. Bover, Olympia & Muellbauer, John & Murphy, Anthony, 1989. "Housing, Wages and UK Labour Markets," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(2), pages 97-136, March.
    6. Muellbauer, John & Murphy, Anthony, 1997. "Booms and Busts in the UK Housing Market," Economic Journal, Royal Economic Society, vol. 107(445), pages 1701-1727, November.
    7. Ashworth, John & Parker, Simon C, 1997. "Modelling Regional House Prices in the UK," Scottish Journal of Political Economy, Scottish Economic Society, vol. 44(3), pages 225-246, August.
    8. Juan Ayuso & Fernando Restoy, 2003. "House prices and rents: an equilibrium asset pricing approach," Working Papers 0304, Banco de España.
    9. Geraint Johnes & Thomas Hyclak, "undated". "House Prices and Regional Labor Markets," Working Papers ec15/93, Department of Economics, University of Lancaster.
    10. Cameron, Gavin & Muellbauer, John, 1998. "The Housing Market and Regional Commuting and Migration Choices," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(4), pages 420-446, September.
    11. McDonald, Ronald & Taylor, Mark P, 1993. "Regional House Prices in Britain: Long-Run Relationships and Short-Run Dynamics," Scottish Journal of Political Economy, Scottish Economic Society, vol. 40(1), pages 43-55, February.
    12. Cook, Steven, 2005. "Regional house price behaviour in the UK: application of a joint testing procedure," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 345(3), pages 611-621.
    13. John Muellbauer & Emilio Fernandez-Corugedo, 2004. "Consumer credit conditions in the UK," Money Macro and Finance (MMF) Research Group Conference 2003 70, Money Macro and Finance Research Group.
    14. Cameron, Gavin & Muellbauer, John, 2000. "Earnings Biases in the United Kingdom Regional Accounts: Some Economic Policy and Research Implications," Economic Journal, Royal Economic Society, vol. 110(464), pages 412-429, June.
    15. Gavin Cameron & John Muellbauer, 2001. "Earnings, unemployment, and housing in Britain," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 203-220.
    16. 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.
    17. John Ashworth & Simon C. Parker, 1997. "Modelling Regional House Prices in the UK," Scottish Journal of Political Economy, Scottish Economic Society, vol. 44(3), pages 225-246, August.
    18. Johnes, Geraint & Hyclak, Thomas, 1994. "House Prices, Migration, and Regional Labor Markets," Journal of Housing Economics, Elsevier, vol. 3(4), pages 312-329, December.
    19. Roche, Maurice J., 2001. "The rise in house prices in Dublin: bubble, fad or just fundamentals," Economic Modelling, Elsevier, vol. 18(2), pages 281-295, April.
    20. Anthony Murphy & John Muellbauer, 1994. "Explaining regional house prices in the UK," Working Papers 199421, School of Economics, University College Dublin.
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    Cited by:

    1. Drobyshevsky Sergey & Narkevich Sergey & E. Pikulina & D. Polevoy, 2009. "Analysis Of a Possible Bubble On the Russian Real Estate Market," Research Paper Series, Gaidar Institute for Economic Policy, issue 128.

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    More about this item

    Keywords

    House Prices; Ripple Effect; Bubble;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other

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