A long-run model of housing affordability

As a result of the recommendations of the Barker Review of Housing Supply in 2004, the Department of Communities and Local Government in England commissioned the construction of an econometric model of regional housing markets in order to examine the effects of different levels of housing construction on long-run affordability.The model has been regularly used as part of the policy making process in England.

The paper describes the structure of the model, which includes sectors covering house prices, household formation, tenure, migration flows, demographics and labour markets. Furthermore, through simulation analysis, the paper examines some of the key policy questions that have occurred in UK housing in recent years.