Relationship between agglomeration effects and housing market dynamics

Abstract

This study is informed by the urban economics literature around agglomeration economies and housing.

Employment density is frequently accompanied by higher housing costs.

Thus, housing costs, in addition to wages, also serve as an indicator of agglomeration economies.

Residential location decisions and property price formation are multifaceted. Property prices are typically a function of:
• local supply conditions—such as planning or political economy
• households’ preferences for living and working in different locations—access to employment, access to urban amenities, local networks and attachment to place