We are grateful for comments, on earlier versions to the referees and to Janine Aron, Andy Chesher, Nick Coote, Mike Dicks, Steve Martin, Geoff Meen, Penelope Rowlatt, Neil Shephard and seminar participants at Bristol, Dublin, NERA and Oxford. David Hendry is due special thanks for unfailing help over the years this research has been in gestation. Responsibility for errors, however, lies with the authors. We are grateful to Rebecca Emerson, Sebastian Galiani and, especially Gavin Cameron for skilled research support. This research was financed in part by ESRC programme grants R000 23 1184 and R000 23 4954.
BOOMS AND BUSTS IN THE UK HOUSING MARKET*
Article first published online: 27 JAN 2012
Royal Economic Society 1997
The Economic Journal
Volume 107, Issue 445, pages 1701–1727, November 1997
How to Cite
Muellbauer, J. and Murphy, A. (1997), BOOMS AND BUSTS IN THE UK HOUSING MARKET. The Economic Journal, 107: 1701–1727. doi: 10.1111/j.1468-0297.1997.tb00076.x
- Issue published online: 27 JAN 2012
- Article first published online: 27 JAN 2012
- Date of receipt of final typescript: January 1997
The often volatile behaviour of UK house prices between 1957 and 1994 is analysed in an annual econometric model. Theory suggests that financial liberalisation of mortgage markets in the 1980s should have led to notable shifts in house price behaviour. The evidence supports the predictions of theory, suggesting shifts took place in wealth effects, as in the consumption function, and that real interest rates and income expectations became more important. The presence of transactions costs suggests important nonlinearities in house price dynamics. The paper also contains an explicit econometric treatment of expectations, demography, supply spillovers from the rented sector and of composition biases in the official house price index.