This paper describes the economics of the housing market and explains why house prices are likely to be more volatile than prices in other markets. It illustrates the volatility of house prices relative to some other key economic variables in the UK. The paper then considers the implications of variability in house prices for household behaviour, surveying a number of studies for the UK and elsewhere on the effects of house price volatility on consumption spending, indebtedness, labour supply, and entry to and exit from the homeownership market.
Authors
Richard Disney
Richard is an IFS Research Associate, a Part-time Professor of Economics at the University of Sussex and a Visiting Professor of Economics at UCL.
Daniel Chandler
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