18 research outputs found

    Universities’ global research ambitions and their localised effects

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    The world's top universities compete for the best international students and staff whilst remaining socially, politically and economically intertwined with the cities that they are located in. This paper analyses this relationship through the lens of the housing market to show the impact of universities’ global research centres on local house price within five of UK's historic cities. To date, these complex effects have been largely ignored in local and regional modelling. By applying a novel spatio-temporal model, we find that the spatial house price effects are much more pronounced in Cambridge than that witnessed in the other comparable UK cities. This not only suggests the relationship between the university and city economy is more interrelated but that its research centres may create localised spill over effects on both businesses and residents. Whilst these relationships are likely to differ across locations, housing shortages remain a universal concern. This suggests that to sustaininternational competitiveness of cities requires sound planning and housing policies that support universities’ growth trajectories

    Housing affordability: is new local supply the key?

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    This paper seeks to predict the impact of future housing supply on the affordability of residential space in the United Kingdom, using quantitative model-based simulation methods. Our spatially disaggregated analysis focuses on the greater South East region, approximately within 1.5 hours commuting time from Central London. A dynamic spatial panel model is applied to account for observed temporal variations in property prices and housing affordability across districts. The dynamic structure of this model allows us to assess the scale and extent of knock-on effects of local supply shocks in one district on other districts in the region. These complex spatial effects have been largely ignored in local or regional housing market forecasting models to date. Applying this model, we are able to demonstrate that local house prices and affordability are not only determined by the underlying supply and demand conditions in the market in question, but also depend crucially on conditions in neighbouring housing markets whose properties can be considered close substitutes within a larger regional housing market. We also show that increasing housing supply in the most critical areas has little impact on (both local and regional) affordability, even if wages do not change in response to an increase in employment

    The spatial consequences of the housing affordability crisis in England

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    This paper discusses the impact of housing affordability on the spatial distribution of productivity and wages. The key theoretical contribution is to phrase the problem as an issue of the composition (rather than the level) of housing demand and link it to heterogeneous preferences and characteristics of households. Using a simple simulation methodology, the study estimates levels of amenity values and wages that would make current house prices as affordable as they were in 1995 in all English local authority districts. Although average wages would be unlikely to increase if housing was more affordable, productivity across England would probably be higher as the spatial distribution of economic activity would change. The key conclusions are that (1) unaffordable housing has significant economic implications; and (2) policy aimed at improving housing affordability should consider targeting housing demand as well as supply

    Judge Dread: court severity, repossession risk and demand in mortgage and housing markets

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    We study the impact of borrower protection on mortgage and housing demand. We focus on variation in the likelihood that a house is repossessed – conditional on the mortgage being in arrears and taken to court – coming from heterogeneity in preferences of judges that adjudicate on repossession cases in England and Wales. We develop a simple theoretical framework that shows that too much borrower protection restricts credit supply, while not enough restricts credit demand. Market outcomes depend on which side dominates. To test the predictions of our model, we exploit exogenous spatial variation in repossession risk created by the boundaries of courts’ catchment areas. In our setting, housing market characteristics, borrower attributes and mortgage rates do not change discontinuously across these boundaries – allowing us to isolate the causal effects of borrower protection. We find that less borrower protection decreases both mortgage sizes and house prices. This pattern suggests that judges in our sample are too strict and that demand determines market outcomes. Furthermore, we find that our measure of borrower protection does not react to market conditions – causing frictions in credit and housing markets

    Simulating the impact of transport infrastructure investment on wages: a dynamic spatial panel model approach

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    This paper estimates the impact of a multi-billion pound investment in Britain's rail transport infrastructure, in the form of high-speed rail links, on wage levels across each of 347 districts of England and Wales. The impacts are based on a dynamic spatial panel model adaptation of standard urban economics based on employment density and commuting patterns. This allows estimation of these global impacts operating via improved commuting times. We demonstrate that while estimates of a traditional market potential approach with fixed effects are to some extent qualitatively and quantitatively similar to our predictions, our predictions allow more heterogeneous effects and give more accurate forecasts. The study finds that on average wages increase by around 2% as employment centres gain improved access to more skilled workers and as spillover effects become spatially more extensive. While most areas see modest positive effects, some locations are negatively affected, in the extreme case by as much as 7%

    The price of indoor air pollution: evidence from risk maps and the housing market

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    This paper uses the housing market to examine the costs of indoor air pollution. We focus on radon, a common indoor air pollutant which is the leading cause of lung cancer after smoking. For identification, we exploit a natural experiment whereby a risk map update in England induces exogenous variation in published pollution risk levels. We find a significant negative relationship between changes in published pollution risk levels and residential property prices. Interestingly, we do not find a symmetric effect for decreasing risk. We also show that the update of the risk map led higher socio-economic groups (SEGs) to move away from affected areas, attracting lower SEG residents via lower prices. Finally, we develop a new theoretical framework to account for preference based sorting, which allows us to calculate that the average willingness to pay to avoid the risk of indoor air pollution is 1.6% of a property price

    Are government and bank loans substitutes or complements? Evidence from spatial discontinuity in equity loans

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    This article studies the impact of an increase in the limit of a direct equity loan provided by the U.K. government to finance mortgage deposits on aggregate mortgage lending by banks. It uses the spatial discontinuity methodology and takes advantage of the natural experiment which occurred when the limit of equity loans increased in London after the reform of the Help‐to‐Buy (HTB) scheme. By comparing postcode sectors on the opposite sides of the London boundary, we measure the impact of the new policy on very similar housing markets. The results show that higher equity loans increase aggregate mortgage lending by banks

    Empire building? : analysing the drivers towards mega-mergers in the English housing association sector

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    Fundamental changes to the economic climate, government regulations and investment funding have had a profound impact on the operating environment for English housing associations, forcing them to pursue new business models in order to ensure their long-term survival. Whilst mergers are not new for the sector, a new wave of mega-mergers has materialised, with super-sized housing associations projected to become amongst the largest volume housing builders in the country. Scale, however, does not necessarily guarantee automatic efficiency gains or increased development output. Yet with size comes status and influence, strengthening the ability for organisations to shape their operating environment and take control of their future. Drawing on business theory, this paper examines the way in which wider policy and business drivers alongside managers’ motivations and strategic choices have culminated towards this mega-merger activity. The paper suggests that this trend is not only changing organisational forms but also transforming the future direction of the sector