Housing Markets and Economic Convergence in the European Union
Crook, A. D. H., The Town Planning Review
Housing Markets and Economic Convergence in the European Union, Michael Ball and Maurizio Grilli, London, Royal Institution of Chartered Surveyors, 1997, 52 pp., £19.95
Comparative housing research has been a growth area in housing studies in recent years, including those focusing on the countries of the European Union. Many of these have tended to be in the 'compare and contrast' and classificatory mould. Some have also looked at evidence of convergence towards a 'European model' of housing supply and consumption. Most have concluded that there are sharp differences between the housing systems of the EU countries, differences which the EU treaties as such will not remove, as housing will remain a responsibility of individual member governments. However, given the close relationship between economic systems and housing markets and systems, we cannot ignore the possible impact of economic convergence on the housing systems of individual countries.
Nor can we ignore the potential impact which housing systems themselves will have on the achievement of economic convergence and of other EU-wide objectives. This impact is the focus of this study by Ball and Grilli published by the RICS in 1997 as one of their research series. Their key conclusion is that the operation of housing markets in EU countries can undermine convergence, economic efficiency, competitiveness and stability objectives and, as they point out, we ignore the impacts of housing markets on member states' macro-economies at our peril.
Although written before monetary union commenced in 1999, Housing Markets and Economic Convergence in the European Union is still an important study. What is particularly interesting is its focus on the possible impacts of national housing markets on economic convergence. It uses available national-level data (with all its limitations) to analyse housing and economic cycles in member states, examining evidence, for example, of the relationships between housing market volatility and economic cycles.
This appears very much an exploratory study, but none the less it found some important results. Most significantly it finds that each member state's housing markets and systems react differentially to economic shocks. As a result of careful analysis and appropriate use of statistical techniques to examine responses to economic shocks it divides member states into four regional subgroups. First, the EU core group (including Austria) have stable housing systems that generally have limited impacts on their macro-economies. …