Housing cycles in the UK: a historical and empirical investigation

Holcomb

2020

IJHMA

Purpose This paper aims to analyze the median price for existing single-family housing units in Las Cruces, New Mexico. The proposed theoretical model accounts for the interplay between supply and demand sides of a metropolitan housing market. Design/methodology/approach This study analyzes the median price for existing single-family housing units in Las Cruces, New Mexico. The proposed theoretical model accounts for the interplay between supply and demand sides of a metropolitan housing market. Explanatory variables used in the analysis are real per capita income, the housing stock, real mortgage rates, real apartment rents and the median real price of single-family units in the USA. Annual frequency data are collected for a 1971–2017 sample period. Parameter estimation is completed using two-stage generalized least squares. Empirical results confirm several, but not all, of the hypotheses associated with the underlying analytical model. In particular, Las Cruces housing prices are found to be reliably correlated with local income and national housing prices. Findings Empirical results confirm several of the hypotheses associated with the underlying analytical model. In particular, Las Cruces housing prices are found to be reliably correlated with local income and national housing prices. Research limitations/implications Results obtained support only a subset of the hypothetical relationships associated with the theoretical model. Additional testing for other small and/or medium sized is required to clarify whether these outcomes are unique to Las Cruces. Practical implications Local income fluctuations and national housing price fluctuations appear to be reliably related to housing price fluctuations for this metropolitan economy. Originality/value Comparatively little housing market research has been conducted for small and medium size urban economies. There is no guarantee that results obtained for large metropolitan housing markets are representative of smaller regional housing markets. The model developed has fairly moderate data requirements and may be applicable to other small and medium size economies such as Las Cruces.

Section: Empirical Analysismentioning

confidence: 99%

Las Cruces housing price fluctuations

Holcomb

2020

IJHMA

“…For example, estimates based on a Markov switching VAR model demonstrate differences in the duration and magnitude of regional housing cycles (Chowdhury & Maclennan, 2014). Another economic study compares the house prices and affordability cycle to find a significant synchronisation between the two (Pitros & Arayici, 2017). However, recent empirical research suggests that the housing market cycle synchronisation in the UK is weaker than in the US (Miles, 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

An empirical investigation into regional housing market synchronisation in Poland

Trojanek,

Gluszak,

Kruszka

2023

EBER

The article aims to investigate the synchronisation of metropolitan house prices from 2000 to 2020 based on novel empirical data. We applied several econometric procedures to address the cyclicity of housing markets. Research Design & Methods: Using a unique dataset of over four million offers, we investigated the synchronisation of 18 regional housing markets in Poland from 2000 to 2020. The study used spectral analysis. Findings: The study proved the strong synchronisation of housing cycles in Polish regional housing markets. Moreover, when the cycle amplitude was considered, the econometric analysis showed regional disparities in the cyclical behaviour of housing prices. According to the research, Lublin and Opole had the lowest housing cycle magnitude, and Gdańsk, Katowice, and Łódź had the largest magnitude.Implications & Recommendations: The information about housing cycles has important policy implications. Housing wealth effects generated by cyclical house prices may be more persistent than financial wealth effects. Consequently, they may substantially affect consumption dynamics. Therefore, precisely identifying market cycles and differences in cycle synchronisation is vital when constructing an effective, selective, and well-timed monetary policy. Contribution & Value Added:The research narrows the knowledge gap on the synchronisation of housing markets in an emerging economic environment. With their distinct institutional structures, Eastern European countries have little knowledge of this issue.

“…On the other hand, Stout et al (1995) describe a cycle as "a predictable pattern of occurrences, as in the upward and downward sweep of a sine curve. In terms of property cycle; Pitros and Arayici (2017) attempt to define property cycles as a tendency for property demand, supply, prices and returns to fluctuate around their long-term trends or averages. In some patterns, we see distinct stages of rising, sustaining, falling and dormancy.…”

Section: Types Of Real Estate Cyclesmentioning

confidence: 99%

“…Several studies have been done by researchers regarding real estate cycles. However, most of these studies have focused on the office market sector (Born and Pyhrr, 1994; Wheaton et al , 1997; Shilton, 1998; Wheaton, 1999; Baum, 2001; Lee, 2011; Rottke and Wernecke, 2002; Barras, 2005; Pyhrr and Born, 2005; Robinson, 2005; Pholphirul and Rukumnuaykit, 2009; Ho and Addae-Dapaah, 2014; Pitros and Arayici, 2017). These studies looked at the nature and dynamics of property cycles, their effects on the economy and strategies for dealing with these cycles.…”

Section: Introduction and Background Of The Studymentioning

confidence: 99%

An assessment of real estate cycles and their impact on property values in Gaborone, Botswana

Kampamba

Kachepa

Lesobea

2022

IJHMA

Purpose The purpose of this study was to assess real estate cycles and their impact on property values in Gaborone, Botswana. Investors and real estate professionals in Botswana rarely assess property cycles when purchasing property. This study therefore, aims to assess whether real estate cycles do exist, their duration and the type of real estate cycle that Botswana experiences. Design/methodology/approach Data was collected from primary and secondary sources. This included sourcing out information at the Deeds Registry Office in Gaborone on residential property sales and a questionnaire to 100 property investors. A record was made of properties that were sold for the period of 16 years starting from the year 2000 to 2016. Secondary data on the other hand was also collected from published and unpublished books, academic journals, professional journals, magazines, reports and monographs. A quantitative approach was used in this study. Data was analysed using Microsoft Excel and subsequently presented in form of tables and graphs. Findings The findings from the literature review revealed that there are four phases in the real estate cycles (recovery, expansion, oversupply and recession) and each has distinct features that an investor must be aware of to avoid consequences in the property market. The results from the data analysis revealed that real estate cycles do exist in Botswana as identified during the past 16 years. The cycle that Botswana experiences is called the kitchen cycle. It was also evident that Botswana experienced three cycles lasting five to six years each. Furthermore, it was discovered that all phases in the real estate cycles affect property values. Research limitations/implications There is relatively little information about property cycles and their timing in Botswana. Therefore, this study may assist valuation surveyors to make promptly informed decisions on property investment through cycle assessment and hence positively inform the public and financial stakeholders. Society might find this beneficial in as far as decision-making is concerned when thinking of investing in real estate. The current system at the deeds office is cumbersome and time consuming, thus making it difficult for the researchers and possibly the public to analyse the property market. This study therefore, may encourage the Deeds Registry Office to computerize their records. Practical implications There is relatively little information about property cycles and their timing in Botswana. Therefore, this study may assist valuation surveyors to make promptly informed decisions on property investment through cycle assessment and hence positively inform the public and financial stakeholders. Social implications Society might find this beneficial in as far as decision-making is concerned when thinking of investing in real estate. Originality/value To the best of the authors’ knowledge, this paper is the first of its kind in Botswana to extend the knowledge of real estate cycles and their impact on property cycles in Botswana.