Chris Leishman

Intra‐Urban migration and housing submarkets: theory and evidence

In the 1950s and 1960s a group of housing economists at Columbia University developed a framework for the analyses of urban housing markets which was based around the concept of housing submarkets and household migration. There is now widespread agreement amongst housing economists that submarkets should be adopted as a working hypothesis but the concept has been reformulated in terms of intra‐urban relative house price differentials. The accepted test for submarket existence uses a hedonic model of house prices which assumes market equilibrium. This paper returns to an analysis of submarkets which focuses on spatial migration patterns. By examining household intra‐urban mobility patterns in the Glasgow housing market it is possible to demonstrate that submarkets tend to be self‐contained. The analysis also suggests that the current standard statistical tests may be incomplete and in the case of Glasgow underestimate the number of submarkets.

Structural Change in a Local Urban Housing Market

This paper addresses the structural change in a local urban housing market within a submarket framework. There is a voluminous literature examining the economic structure and operation of urban housing submarkets, with much of the associated empirical work based on static cross-sectional studies. Analysis of the temporal dynamics of local markets has tended to be perfunctory. As such, our understanding of structural change over time remains underdeveloped. In this paper we construct repeat-sale indices at the urban submarket level and deploy cointegration analysis to examine the stability of spatially defined housing submarkets within Glasgow between 1984 and 1997. Specifically, we consider whether price differences between submarkets have been eroded by a process of arbitrage operating through supply-side responses and/or migration flows. The empirical analysis shows that a stable system of housing submarkets persists throughout the study period.

Spatial Dynamics of the Housing Market: An Interurban Perspective

A major unproven hypothesis in housing economics is that regional ripple effects are caused by household migration between regions. This paper examines household migration and price ripples at the level of local housing markets driven partly by the fact that such migration linkages are likely to be more pronounced between local, rather than regional, housing markets. Following a review of regional housing market studies, several hypotheses linking the existence of lead-lag relationships and cointegration with the scale of migratory linkages between local housing market areas (LHMAs) are proposed. Using private housing transactions data for Strathclyde, a sub-region of Scotland, the paper identifies two clusters of LHMAs that differ in terms of their migratory linkages with Glasgow, the hypothesised leading housing market of the sub-region. Tests for lead-lag relationships and cointegration confirm the link between migration and house price changes.

Spatial change and the structure of urban housing submarkets

Many applied studies of the structure of urban housing systems involve considerable imprecision in terms of the identification of sub-market boundaries. This is often a function of reliance on prior knowledge, particularly of the potential spatial divisions within urban housing systems. This paper introduces an application of the multi-level hedonic model as a tool to identify housing sub-markets, and as a method of identifying temporal change within the sub-market system. Based on empirical analysis of two study years (2002 and 2006) in the city of Glasgow, this study demonstrates a finely-grained approach to the identification of spatial sub-markets and uncovers evidence of spatial change between the two study years. The multi-level derived sub-market boundaries are shown to be a credible and statistically meaningful alternative to prior notions of the sub-market system. The paper concludes that multi-level models have considerable potential as a tool both to identify the sub-market structure, and for detecting temporal change in the delimitation of sub-markets.

The Impact of Environmental Contamination on Condo Prices: A Hybrid Repeat-Sale/Hedonic Approach

We extend the literature on the impact of externalities using an approach based on a hybrid of hedonic and repeat-sales methods. The externality in question is groundwater contamination in Scottsdale, Arizona. The use of condominium sales allows us to assume that major physical characteristics remain unchanged, but location parameters may be altered by urban growth and development as well as contamination. We find an economically significant discount for properties located in the contaminated area. Interestingly, it does not appear until several years after the contamination becomes publicly known, and it seems to have disappeared before the end of the study period.

A Local Housing Market Model with Spatial Interaction and Land-Use Planning Controls

There have been relatively few attempts to construct local housing market models in the United Kingdom—particularly models with an explicit treatment of land supply. In this paper we report the results of a pilot study designed to test the practicability of estimating a system of equations which describe housing market dynamics at the local level. Former district council areas in Central Scotland are used as a proxy for local housing markets within a region, thereby providing a panel dataset. A simple supply — demand system with separate equations for inward and outward household migration is modelled using two-stage least squares. The empirical results are varied, with some equations and coefficients performing more closely in line with prior expectations than others. House price levels are explained largely with reference to household income, socioeconomic status, and past levels of house price growth. Higher price levels and higher deprivation diminish inward migration. There are also suggestions in the results that higher rates of new-build supply partly cause higher inward migration. The rate of outward migration increases with ethnicity and wealth and decreases with deprivation. The empirical performance of the new-build supply equation is poor although the results do yield some interesting insights. House building output generally decreases as the proportion of ‘small’ sites in the land supply increases. There is also evidence that house building output decreases as land supply in neighbouring areas increases. We conclude the paper by outlining further directions for modelling prices, supply, and migration at local housing market level. In particular, the case is made for further work involving the collection of wider and longer panel datasets and for extending the pilot study work beyond Scotland.

Testing for the existence of office sub-markets: A comparison of evidence from two cities

Most conceptual and applied economic models of the structure of urban office markets have been developed from traditional location theory. In their basic form, these models tend to posit a trade-off between accessibility and space. In the light of changing business practices and decentralisation, however, some authors have noted that the influence of agglomeration economies on the locational dynamics of commercial property markets may be declining. In this paper, we seek to undertake an indirect test of the power of intraurban office location theory. The paper is developed in two stages. In the first part, we examine the theoretical case for the existence of sub-markets in urban office markets and outline the implications of sub-market existence for traditional office location theory. In the second part of the paper, using data from Edinburgh and Glasgow, we undertake empirical tests for sub-market existence. A comparison of the results from the two city markets provides limited evidence of the existence of spatial sub-markets and suggests that markets might take different spatial forms depending on the urban context. The paper concludes by highlighting the need to account for the complex structure of urban property markets in developing models for property appraisal, taxation and land use planning purposes.

Sustainable Urban Form and Residential Development Viability

Arguments about sustainable urban form have generally been in normative terms without recourse to its practicality. The paper shows that the essential elements of urban form are outcomes of real estate markets. The focus of the research is to examine the economic sustainability constraints to the adaptation of the existing urban form via housing market development viability. To address the task a number of econometric models are linked together to estimate spatial patterns of viability in five cities. The results demonstrate a substantial difference between cities that can be attributed not to urban form per se but to socioeconomic factors. This demonstrates that in practice it is impossible to divorce the physical structure of cities from their economic and social structure. Viability is also influenced strongly by public policy through the location of social housing. The research suggests that a driving force/constraint for development viability is the level of neighbourhood house prices. Large swathes of negative viability are found even without accounting for the additional costs of brownfield development, suggesting that there are major constraints to the reconfiguration of housing markets in some cities in a piecemeal way.

Understanding Neighbourhood Housing Markets: Regional Context, Disequilibrium, Sub-markets and Supply

Neighbourhood housing markets play a pivotal role in the evolution of the demographic, social and economic functioning of neighbourhoods, and hence are necessarily a key concern for national and local policy makers. This paper examines propositions about the determinants of neighbourhood housing market outcomes in England, particularly price changes over the last 10–20 years. These concern the influence of (sub-)regional economic and demographic forces, the nature and persistence of disequilibrium, the existence of sub-markets and the influence of supply. Data from a wide range of sources at ward and local levels underpins models of price level and change set within a multi-level structure. Results are discussed in relation to the role of neighbourhood in an understanding of the micro-structures of housing markets, as well as in relation to contemporary policies.

HOUSEBUILDER NETWORKS AND RESIDENTIAL LAND MARKETS

The commercial prospects of speculative housebuilders depend crucially on successful land acquisitions. This paper presents new evidence revealing the importance housebuilders attach to networks with other important actors in securing future land supplies. Since networks depend on trust, reputation and voluntary collaboration, they indicate the importance of social relations within the industry. The paper argues that UK speculative housebuilders rely more on networks than markets to source land and that they structure those networks to enhance their own competitive positions. Reflecting Granovetter’s belief in the strength of weak ties, the paper emphasises the breadth not depth of housebuilder networks and contends that social relations within the industry are primarily dependent on pragmatic considerations of mutual self-interest.