Abstract for: A Simulation Modelling of Property Markets: A Case of the UK Housing Market
This paper provides a system approach to the analysis of the property markets by first setting out a high level model of the market. The imperfections in information and distortions in such markets are widely acknowledged and accounted for while the role of legal, financial and social institutions being emphasised. The rate of production in the property markets in most advanced economies is a function of institutional factors as developed over time representing unique and path-dependent characteristics. The paper describes the main factors that have gone into the production of a general System Dynamics simulation model of the property markets which further focuses on the characteristics of the UK housing market as a case study and provides an analysis of its current structure. The paper indicates how in the absence of reliable and sufficient information simulation modelling can aid decision making in the real estate. As an imperfect market the role and potential areas of impact of governmental policy are outlined. The effects of tightening worldwide credit regimes on the UK construction industry are included in the model. The relationships between the credit crunch and the behaviour of the construction industry are identified and are explored. The analysis presented in the paper concludes with potential scenarios for determining the future behaviour of the market.