Counter-urbanisation, filtering, and dynamics changes in urban rural housing submarkets

1
Counter-urbanisation, filtering, and dynamics
changes in urban rural housing submarkets

• Nan Liu
• Research student in Property
• University of Aberdeen Business School

2
Background and motivation

• Counter-urbanisation population flows from urban
  cores to rural areas, caused by
• The change in residential preferences of
  working-age people
• The expansion of commuting fields round
  employment centres
• Improvements in transport and communications
  technology
• The emergence of scale diseconomies and social
  problems in large cities
• The growth of employment in particular localised
  industries (e.g. tourism)
• The acceleration of retirement migration etc.
• Source Champion 1988

3
Background and motivation

• Consequences in the housing market
• Locals are believed to have been priced out of
  the housing market by incomers (Shucksmith, 1981,
  case study on the Lake District area)
• outsiders occupy second home and retirement
  home, competing for residential property, the
  price of housing has escalated well beyond the
  reach of most Padstonians (Gilligan, 1987, case
  study on Cornwall)
• Incomers purchase property from all segments of
  the housing market and therefore have increased
  the demand for all housing (Stockdale et al,
  2000, analysis of the Scottish rural housing
  market).
• Such research however, overlooks changes in
  market dynamics in different submarkets (both
  quality and geography), and its impact on other
  submarkets lacks quantitative evidence.

4
Prime research aim

• To investigate changes in urban and rural
  house prices and housing stock by tracking the
  changes in market dynamics resulting from
  counter-urbanisation.

5
Research framework
6
Traditional filtering models

• Determinates
• Cross price elasticities for demand
• Quality quantity of new constructions.
• (Galster Rothenberg, 1991)

7
Spatial filtering theoretical analysis

• Underlying assumptions
• Population only flows from urban areas to rural
  areas
• Population flows from the urban high quality
  submarket to the rural high quality housing
  market
• Deteriorations effect on dwellings filtering
  process is embodied in the decision of upgrading
  and downgrading

8
Spatial filtering theoretical analysis
9
Spatial filtering theoretical analysis

• Filtering in the urban areas (medium run)
• In UH quantity decreases, price change
  ambiguous, dwellings downgrade
• In UM quantity and price change ambiguous,
  dwellings downgrade, households filter up
• In UL quantity change ambiguous, price
  decreases, lowest quality housing gets
  demolished, households filter up.

10
Theoretical analysis

• Filtering in the rural areas (constrained
  constructions)
• In RH quantity increases, house price increases
• In RM quantity decreases, house price increases,
  houses filter up
• In RL quantity decreases, house price increases,
  houses filter up.

11
Theoretical analysis

• Filtering in the rural submarkets (allowing new
  construction in all quality markets)
• In RH quantity increases, house price increases
• In RM and RL both quantity and price changes are
  ambiguous depending how much contraction takes
  place
• House still filter up, households filtering is
  possible if supply functions in RM and RL shift
  to the right.

12
Some initial findings on Aberdeen city and
Aberdeenshire

• Location Northeast Scotland
• Urban oil and gas industry based
• Experienced counter-urbanisation
• House price in some rural areas increased
  dramatically.

13
Migration, households, and housing stock in
Aberdeen city and Shire
The region experienced population flows from the
urban to rural areas

• Both city and shire gained in number of
  households
• Surplus housing stock exists in both market
• The city has more surplus stock.

14
Data and limitation

• Aberdeen Solicitors Property centre data
  (1984-2008)
• Information regarding existing housing stock
• House characteristics, price and location
• Repeated sales
• No information on households
• Limited information on new house buildings.
• New construction data from the central
  governments statistics (1986-2008)
• Private new house buildings start completion
  date
• Location (settlement)
• No indication on dwelling type/price
• No information on council/housing association
  completions

15
Some findings

• Repeated sale data categorised into four quality
  submarkets
• Second sale compare to the first sale

16
Physical change

• Data shows evidence of physical change
• 27 of the repeated sales experienced increase in
  total number of rooms 11 had total number of
  rooms reduced
• Difficult to conclude whether change in quality
  submarket is caused by upgrading/downgrading.

17
New construction

• Constructions take place in all submarkets
• More dwellings have been built in the rural areas
  than in the city
• Evidence shows degrees of constraint on
  constructions in both urban and rural areas

18
Conclusion and future research

• Theoretical analysis suggests
• rural households MIGHT be forced out as a
  consequence of counter-urbanisation, depending on
  the construction activity
• low income groups in the urban area will benefit
  from the phenomenon
• Both quantity and price in all submarkets will
  change
• Both house and household filtering take place.
• Empirical analysis suggests
• A certain level of house filtering take place
  (e.g. house change quality submarket, and
  physical change do occur)
• New construction do take place
• Limitations require more comprehensive data (BHPS
  data)
• Policy implication urban and rural should be
  considered as a whole

19
Theoretical analysis

• Supply adjustments in the medium run
• New constructions takes place when the gap
  between cost and price is the largest

20
Theoretical analysis

• Supply adjustments in the medium run
• conversion (upgrading and downgrading) takes
  place when there is opportunity to increase