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Income, Location and Housing in Greater London

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  • J.R. Slater

    (Industrial Economics at the University of Birmingham, England)

Abstract

This paper, in the neoclassical tradition, uses house purchase data to estimate income and (indirectly) price elasticities of demand. Grouping of data is a familiar means of 'washing out' transitory variations in measured income. Errors in the independent variable would be expected to bias downward the elasticity estimate, but recent work demonstrates that incorrect grouping may yield overestimates. Of the aggregation methods used, the 'correct' method yields results very close to those from the ungrouped data. A conventional demand analysis then follows which points to income inelasticity of demand. If price is proxied by location, then demand seems superficially price elastic. However, there are suggestions, with caveats, that income elasticity may vary with income and further work on specification seems called for.

Suggested Citation

  • J.R. Slater, 1986. "Income, Location and Housing in Greater London," Urban Studies, Urban Studies Journal Limited, vol. 23(4), pages 333-341, August.
    • Handle: RePEc:sae:urbstu:v:23:y:1986:i:4:p:333-341
    DOI: 10.1080/00420988620080381
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    References listed on IDEAS

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    1. King, Mervyn A., 1980. "An econometric model of tenure choice and demand for housing as a joint decision," Journal of Public Economics, Elsevier, vol. 14(2), pages 137-159, October.
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    4. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, July.
    5. Wilkinson, R K, 1973. "The Income Elasticity of Demand for Housing," Oxford Economic Papers, Oxford University Press, vol. 25(3), pages 361-377, November.
    6. Mervyn A. King, 1980. "An Econometric Model of Tenure Choice and Demand for Housing as a Joint Decision," NBER Chapters, in: Econometric Studies in Public Finance, pages 137-159, National Bureau of Economic Research, Inc.
    7. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    8. Smith, Barton A & Campbell, John M, Jr, 1978. "Aggregation Bias and the Demand for Housing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 495-505, June.
    9. Polinsky, A Mitchell, 1979. "The Demand for Housing: An Empirical Postscript," Econometrica, Econometric Society, vol. 47(2), pages 521-523, March.
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    Cited by:

    1. Liu, Xiangling, 2019. "The income elasticity of housing demand in New South Wales, Australia," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 70-84.

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