Economics

Providing shelter consumption and, directly or indirectly, operating as a personal asset, housing is a major part of personal-sector spending, saving and financial obligations. Housing preferences, constraints and choices impact on individuals and households across different spatial strata, from small neighbourhoods to the city and metropolitan region and upwards to the national economy and international flows of people and capital. Housing is closely connected to other important systems like the labour market, the built environment and financial markets, and to health and wellbeing outcomes. Housing helps shape individual welfare and economic productivity, but it also is the site and source of inequalities and the location of considerable state interventions of different forms and with quite different aims and objectives. All of these topics and concerns have an economic dimension which can be illuminated by different modes of economic analysis. This chapter contends that a variety of economic analyses can contribute to our understanding of housing processes and outcomes and can in turn enrich and deepen non-economic perspectives of economic phenomena. This chapter will largely confine itself to microeconomic scales. Taking a pragmatic approach to applied economics, the chapter draws on a number of traditions, including classical economics, neo-classical economics, old and new institutional economics, complexity (systems thinking), and behavioural economics, suggesting how each can shed new and different light on housing matters.