Housing Market Processes, Urban Housing Submarkets and Planning Policy

Article excerpt

This paper seeks to develop an analytical framework that can be used to generate insights into the working of local land and property markets and provide the basis for planning policies. The framework is based on the notion that local housing market areas are composed of a system of spatially defined housing submarkets. It is applied to an empirical analysis of the Glasgow housing market. The primary focus of the research presented is on migration patterns between and within submarkets and the role of price structures in these processes. In the concluding section the utility of this research is assessed as a tool for guiding decisions taken in planning for local housing markets.

In the UK, planning for the housing market is the responsibility of local authorities. Effectively local authority planners are expected to establish the level of land required for new homes in the medium term and to frame these estimates within an assessment of changing consumer preferences, market dynamics and economic context. This being the case, O'Sullivan (2003) notes that some of the most sophisticated analyses of local markets are undertaken by land use planners. These plans include estimates of future rates of household formation, tackling market boundary issues and exploring tenure choice trends. However, the lack of economic content underpinning this analysis is often criticised.

For instance, in a recent paper, Evans (2003) bemoans the fact that planning has consistently ignored the work of urban economists. Cullingworth similarly notes that 'economic analysis plays a very minor part in land-use planning' (1997, 951). He goes on to say that the degree of ignorance is compounded by the fact that academic economists have only a modest level of interest in the working of land markets. There are clearly two issues here. First, both Evans and Cullingworth are correct to call for more economic analysis within the planning process. Secondly, however, it could also be noted that recent academic economics has had little to offer planning professionals. In our view it is hardly surprising that planners have not looked to economic analysis when, for example, mainstream urban housing economists have based much of their empirical work on local housing markets on the access-space trade-off model (or New Urban Economics) or highly aggregated econometric and simulation models (see Gibb, 2003 for a recent review). This family of models is predicated on patently unrealistic assumptions about the operation of the housing market. Thus, while Adams and Watkins (2002) point out that economic analysis can facilitate a more sophisticated analysis of the size, type and location of new housing, they make it clear that the approach adopted needs to be based on a framework that relates better to operational and structural divisions within the markets.

In this paper we develop an analytical framework based on the concepts of 'local market areas' and 'submarkets'. We then seek to show how this can be applied in a way which will generate greater insight into the workings of local land and property markets. The next section is concerned with conceptual issues. This is followed, in section three, by details of our case study area and of the dataset available for our analysis. The fourth section develops an empirical analysis of the Glasgow housing market within a submarket framework. In this empirical section, the primary focus is on migration patterns between and within submarkets and the role of price structures. In the concluding section we discuss the utility of the conceptual framework and analytical approach as a means of incorporating market information into housing planning decisions at the local level.

Planning and housing market analysis

Planning cannot evade underlying housing market influences but there is a consensus in the UK and in many parts of the world that it should intervene in and shape the market to meet social goals. …