Economic perspectives on the structure of local housing systems

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Abstract
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.