Housing Theory: Regional Issues

Abstract

The majority of theoretical analysis in housing deals either with the national or the urban dimension but, as we saw in Chapter 2, the fact that labour markets are typically not integrated at the regional level, i.e. commuting is not widespread between regions, gives rise to a further set of issues. Space enters the analysis for the first time and the main issue with which we are concerned is convergence in spatial markets over the course of time. In Chapter 2 we saw that we could describe statistically the time-series properties of regional price differentials using cointegration analysis, for example, but theoretical explanations for the relative movements were deferred until this chapter. Furthermore we saw that degrees of regional convergence appeared to differ internationally. Table 2.6 showed that whereas prices in the UK regions have grown at similar rates, this was not true in either the USA or Australia. This might, of course, simply be a function of size and, indeed, results by Hort (1997) suggest that Swedish experience has been more akin to that in the UK.