Tiered Housing Markets and their Relationship to Labour Market Areas

This paper develops a tiered geography of local housing market areas (HMAs) that provides a national framework for spatial planning. It is derived from a theoretical understanding of the economic basis of HMAs. The analysis explores the relationships between the tiers of the HMA geography and local labour market areas. Drawing on this understanding, the empirical research generates sets of different potential geographies of HMAs for England based on an algorithm that applies criteria linked to the degree of closure of migration and/or commuting patterns. A range of theoretically appropriate criteria then enable the different geographies to be assessed. The choice of geography is guided by Chow tests of statistical differences in standardised house prices in neighbouring HMAs derived from hedonic regressions. Finally, conclusions are drawn on the validity of the approach developed. The empirical work is on England and datasets drawn from the Census and Land Registry.