Richard Dunning

Homebuyers and the representation of spatial markets by information providers

Purpose - – The purpose of this paper is to renew a research agenda considering the impact that information providers’ processes are having on the housing market; in particular to develop a research agenda around the role of the Internet in shaping households’ perceptions of the spatial nature of housing markets. Design/methodology/approach - – This paper reviews the existing literature. It uses preliminary extensive survey findings about the role of the Internet in housing search to hypothesise ways in which households may be affected by this transition. Findings - – Not applicable – other than evidence for the growth in the importance of the Internet in shaping households’ housing search. Practical implications - – First, the academy needs to readdress the theory surrounding information acquisition and use insights from economics, sociology and psychology to understand these processes. Second, local authorities and academics should analyse the impact of Internet use on housing market boundaries (and the profound subsequent impact on policy traction). Third, estate agents should reconsider the role of the Internet in shaping housing markets and provide a critical response to the large property search engines. Originality/value - – This paper reviews the literature and explores the necessity of a renewed interest in research on the role of information sources in framing and constraining housing search behaviour.

Technological change and estate agents’ practices in the changing nature of housing transactions

Abstract The construction of housing markets, mediated by estate agents, is changing. The ‘information age’ has witnessed widespread changes to personal intermediation across many business sectors (e.g. holiday sales and insurance brokerage), yet estate agents continue to be extensively involved. This paper asks whether the intermediation process has changed and why this is the case. Through a cultural economy investigation of the everyday practices of estate agents in New Zealand and England we identify how they have adapted, directed and responded to technological and social changes. In England, three service levels of agency arose with varying roles for technological information dissemination, the matching process and the formulization of prices. In New Zealand the hegemony of high quality service has resisted other mediation forms; retaining socially negotiated housing outcomes. Despite these differences, the unique facets of housing, its complex sale procedure and emotional transaction nature have hitherto enabled the adaptive capacity of estate agents to continue influencing housing market processes and rationalize their ongoing construction of housing transaction processes.

Using Multi Level Modeling Techniques as an AVM Tool: Isolating the Effects of Earthquake Risk from Other Price Determinants

Automated valuation methods employ diverse methodologies. The appropriateness of the individual model is contingent upon the characteristics of the housing market in question. In circumstances where the housing market is spatially variegated and data is sparse, distinguishing impacts of an environmental event or externality on different spatial segments of the market is challenging. A multi-level model provides one possible approach. Here we apply the model to explore the impact of a natural disaster on the housing market in Istanbul, a city located in a region with relatively frequent seismic activity. The Chapter provides a relatively simple exemplar of the method and its utility. Two levels of influence emerge. We distinguish between the citywide and segmented neighbourhood impact of earthquakes on house prices. Appraisers working in segmented markets where the potential for natural disasters occur might consider the methodological advantages of using multi-level modeling to help isolate both the effects of the risk of damage and also to discern the spatial variations in such effects. Furthermore we contend that there is considerable scope to expand the modelling approach to take account of different levels.

Modelling the impact of earthquake activity on real estate values: a multi-level approach

Purpose This paper aims to explore the impact of a recent earthquake activity on house prices and their spatial distribution in the Istanbul housing market. Design/methodology/approach The paper uses a multi-level approach within an event study framework to model changes in the pattern of house prices in Istanbul. The model allows the isolation of the effects of earthquake risk and explores the differential impact in different submarkets in two study periods – one before (2007) and one after (2012) recent earthquake activity in the Van region, which although in Eastern Turkey served to alter the perceptions of risk through the wider geographic region. Findings The analysis shows that there are variations in the size of price discounts in submarkets resulting from the differential influence of a recent earthquake activity on perceived risk of damage. The model results show that the spatial impacts of these changes are not transmitted evenly across the study area. Rather it is clear that submarkets at the cheaper end of the market have proportionately larger negative impacts on real estate values. Research limitations/implications The robustness of the models would be enhanced by the addition of further spatial levels and larger data sets. Practical implications The methods introduced in this study can be used by real estate agents, valuers and insurance companies to help them more accurately assess the likely impacts of changes in the perceived risk of earthquake activity (or other environmental events such as flooding) on the formation of house prices in different market segments. Social implications The application of these methods is intended to inform a fairer approach to setting insurance premiums and a better basis for determining policy interventions and public investment designed to mitigate potential earthquake risk. Originality/value The paper represents an attempt to develop a novel extension of the standard use of hedonic models in event studies to investigate the impact of natural disasters on real estate values. The value of the approach is that it is able to better capture the granularity of the spatial effects of environmental events than the standard approach.

Competing Notions of Search for Home: Behavioural Economics and Housing Markets

Abstract The frequent use of the unifying term “behavioural economics” in contemporary economic theories and English housing policies masks divergent accounts of human ability, search processes and housing markets. The resurgence in interest in the behaviours of housing markets brings exchange mechanisms and housing search processes into sharp focus; this paper provides and applies a framework to assess the compatibility of behavioural economics theories of housing search. Assessing the ontological commitments of theories is possible through analysis of their conceptualizations of human ability, the search process and the structure and operation of the market. This assessment reveals a spectrum of diversity; distinctions between “old” and “new” behavioural economics are evident despite there being only limited acknowledgement of this variation. Whilst significant contributions to housing economics have taken place across the spectrum, clear distinctions are needed to prevent policy-makers’ inadvertently misapplying incompatible approaches to behavioural economics and to prevent inappropriate synthesis in academic theorization.

New behavioural business practices: agent interactions in the housing market

Agents have been crucial in shaping owner-occupier housing search and bidding strategies (Levy et al, 2008). But, this is changing. Recent research for RICS shows that UK house purchasers have only very limited exposure to agents. Their decisions are now influenced by Internet listing services and a range of formal and informal contacts (Dunning and Watkins, 2012), altering the institutional framework of housing decisions.The study incorporates interviews with estate agents and website providers businesses in order to provide insights into agentsA• understanding of contemporary institutional arrangements and their role in shaping housing search behaviour. It compares information provision, housing search and decision-making processes in the UK and New Zealand in an A”onlineA• era. These countries have similar levels of consumer demand for owner occupancy, proclivity towards Internet listing services and estate agency roles, but dissimilar selling mechanisms. This juxtaposition enables a cross national reflexive approach to analysing the relationship between agent and housing searcher.The study highlights the opportunities and threats that exist to the estate agency industry within the evolving institutional environment.

Book review - Finance for Housing: An introduction

Published in 2013 Finance for Housing is a product of Davis’ view of the preceding social, economic and political context, a historic narrative of housing finance policies. Its great contribution is to describe, in an accessible style, the neoliberal movement and momentum of housing finance policy across successive governments. Its failure is that it omits key issues (e.g. land values, development finance and gain) and therefore fails to provide a comprehensive theoretical approach for students to analyse the impact of housing finance policies themselves.

Housing and Tax Policy

However, whilst this book offers a largely expert technical analysis of aspects of regeneration policy, it could have benefited from providing more space to the voices of those residents, thereby humanising and texturing what is an otherwise impressive effort to map historical and intellectual context and marshal complex data to develop and expand our understanding of the contemporary challenges for sustainable social development.