Counter-urbanisation, filtering, and dynamics changes in

urban rural housing submarkets

Nan Liu

Research student in Property

University of Aberdeen Business School

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

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.

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.

Research framework

Traditional filtering models

Determinates:•Cross price elasticities for demand;•Quality & quantity of new constructions.

(Galster & Rothenberg, 1991)

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; Deterioration’s effect on dwellings filtering process is

embodied in the decision of upgrading and downgrading;

Spatial filtering theoretical analysis

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.

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.

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.

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.

Migration, households, and housing stock in Aberdeen city and Shire

Household (n)

dwellings (n)

change in household

change in dwellings

2001 96944 105030 - -2002 97424 105675 480 6452003 97924 106280 500 6052004 98635 106754 711 4742005 99269 107670 634 9162006 100735 108618 1466 9482007 102195 109425 1460 807

City

Household (n)

dwellings (n)

change in household

change in dwellings

2001 90602 97014 - -2002 92317 98380 1715 13662003 93727 99654 1410 12742004 95597 101357 1870 17032005 97401 102864 1804 15072006 98774 104226 1373 13622007 100191 105503 1417 1277

Shire

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

The region experienced population flows from the urban to rural areas

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

Some findings

Repeated sale data categorised into four quality submarkets

Second sale compare to the first sale:

Physical change

Data shows evidence of physical change27% 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.

New construction

Submarketcity

centrecity

suburbaccessible

ruralremote

ruralNo. of

constructions8904 7556 16357 7477

•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

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

Theoretical analysis

Supply adjustments in the medium run New constructions takes place when the gap

between cost and price is the largest

Theoretical analysis

Supply adjustments in the medium run conversion (upgrading and downgrading) takes

place when there is opportunity to increase…