Economic perspectives on the structure of local housing systems

This paper examines the notions of market and sub-market in the context of housing. It first proposes specific definitions and then clarifies why the general characteristics of housing are likely to generate sub-markets and why these will tend to exhibit disequilibrium of different forms and durations. These sub-markets may be sectoral or spatial, or indeed both. Empirical evidence on the existence of sub-markets is put forward with respect to certain Scottish cities, using hedonic and other techniques. Finally, the implications of the existence of sub-markets for the stability of local housing systems are assessed.