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Housing Supply, Housing Demand, and Affordability

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  • Bernard Fingleton

    (Department of Economics, the University of Strathclyde, Sir William Duncan Building, 130 Rottenrow, Glasgow, G4 0GE, United Kingdom, bernard.fingleton@strath.ac.uk)

Abstract

The affordability of housing is a major policy issue that has increasingly become a concern for UK government as house prices have risen dramatically in recent years. This is partly because of the importance of affordability for the recruitment and retention of key workers, many of whom are on national pay scales and earning salaries that do not fully reflect the differences in prices that exist, in particular between London and the South East and the rest of Great Britain. Government policy is to increase the supply of housing in order to improve affordability in the greater South East. However, assuming that this expansion in housing supply is also to be accompanied by an expansion in employment, the outcome is that there will be both an increase in supply and in demand for housing, with the counter-intuitive result that, under one of the scenarios set out in this paper, in some areas affordability will worsen rather than improve.

Suggested Citation

  • Bernard Fingleton, 2008. "Housing Supply, Housing Demand, and Affordability," Urban Studies, Urban Studies Journal Limited, vol. 45(8), pages 1545-1563, July.
    • Handle: RePEc:sae:urbstu:v:45:y:2008:i:8:p:1545-1563
    DOI: 10.1177/0042098008091490
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    References listed on IDEAS

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    Cited by:

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    2. Bernard Fingleton & Franz Fuerst & Nikodem Szumilo, 2019. "Housing affordability: Is new local supply the key?," Environment and Planning A, , vol. 51(1), pages 25-50, February.
    3. Katarzyna Kopczewska & Mateusz Kopyt & Piotr Ćwiakowski, 2021. "Spatial Interactions in Business and Housing Location Models," Land, MDPI, vol. 10(12), pages 1-25, December.
    4. Joao Lourenço Marques & Eduardo Castro & Arnab Bhattacharjee & Paulo Batista, 2012. "SPATIAL HETEROGENEITY ACROSS SUBMARKETS: Housing submarket in an urban area of Portugal," ERSA conference papers ersa12p1111, European Regional Science Association.
    5. Ahoura Zandiatashbar & Carla Maria Kayanan, 2020. "Negative Consequences of Innovation-Igniting Urban Developments: Empirical Evidence from Three US Cities," Urban Planning, Cogitatio Press, vol. 5(3), pages 378-391.
    6. Yunlong Gong & Jan de Haan & Peter Boelhouwer, 2020. "Cross‐city spillovers in Chinese housing markets: From a city network perspective," Papers in Regional Science, Wiley Blackwell, vol. 99(4), pages 1065-1085, August.
    7. Liv Osland & Kenneth Gibb & Gwilym Pryce, 2011. "Inequalities in Access to Employment and the Impact on Wellbeing: A Criterion for Spatial Planning?," ERSA conference papers ersa10p717, European Regional Science Association.
    8. Bibik Natalya & Dril Natalia, 2017. "Trends of Housing Construction Development in Ukraine: Retrospective and Contemporary Situation," Baltic Journal of Real Estate Economics and Construction Management, Sciendo, vol. 5(1), pages 51-61, November.
    9. Ying Cao & Daichun Yi & Youqin Huang & Yang Zhu, 2024. "Mismatches between the Supply and Demand of Public Rental Housing in Chinese Cities," Sustainability, MDPI, vol. 16(19), pages 1-20, September.
    10. Baltagi, Badi H. & Bresson, Georges, 2011. "Maximum likelihood estimation and Lagrange multiplier tests for panel seemingly unrelated regressions with spatial lag and spatial errors: An application to hedonic housing prices in Paris," Journal of Urban Economics, Elsevier, vol. 69(1), pages 24-42, January.
    11. Gabriel S. Lee & Stefanie Braun, 2021. "Agglomeration Spillover Effects in German Land and House Prices at the City and County Levels," Working Papers 207, Bavarian Graduate Program in Economics (BGPE).
    12. Baltagi, Badi H. & Fingleton, Bernard & Pirotte, Alain, 2014. "Spatial lag models with nested random effects: An instrumental variable procedure with an application to English house prices," Journal of Urban Economics, Elsevier, vol. 80(C), pages 76-86.
    13. Nikodem Szumilo, 2019. "The spatial consequences of the housing affordability crisis in England," Environment and Planning A, , vol. 51(6), pages 1264-1286, September.
    14. Geoffrey Meen, 2016. "Spatial housing economics: A survey," Urban Studies, Urban Studies Journal Limited, vol. 53(10), pages 1987-2003, August.
    15. Ahoura Zandiatashbar & Carla Maria Kayanan, 2020. "Negative Consequences of Innovation-Igniting Urban Developments: Empirical Evidence from Three US Cities," Urban Planning, Cogitatio Press, vol. 5(3), pages 378-391.

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