A typology of Housing Search Behaviour in the Owner-Occupier Sector

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A Typology of Housing Search Behaviour in the Owner-Occupier Sector

Richard Dunning

BA (Hons) Human Geography, University of Sheffield

MA Commercial Property, University of Sheffield

A thesis submitted in fulfilment of the requirements for the degree of

Doctor of Philosophy

Department of Urban Studies and Planning, University of Sheffield
January 2016

Abstract

Mainstream economics has persistently failed to predict housing market outcomes, and with a growing body of evidence to suggest that its foundational tenets are unrealistic, applied researchers are showing a renewed interest in the microstructures of housing markets and behavioural economics. The process of searching for and purchasing a dwelling to live in is one of the most complex consumption decisions a household will make. Yet many households undertake it successfully. It is intuitively and theoretically clear that households are likely to have varied experiences of the search process, yet there is a dearth of evidence of their actual behaviours, or the variations between different types of behaviours. This research is a response to this substantial gap in knowledge: it aims to describe the variation in search behaviours and to construct a typology by clustering similar search behaviours together. A conceptual model is created to distinguish the key variables across different stages of the search process that potentially exhibit variation between households. A bespoke postal survey was designed to gather households’ perceptions of their behaviour in the housing market in Sheffield in 2010. From this it is evident that households do exhibit very different behaviours and do not conform to the standards of homo economicus. However, there is a spectrum of behaviour from households that exhibit some similarity to utility maximisers through to satisficers. Using the survey responses, in an original application of a combined categorical principal components analysis and cluster analysis method, four distinct clusters are evident. The clusters: relational satisficers, financial responders, discontents and petite, lifestyle decisives exhibit different behaviours in the housing market. This typology has potential to be used in modelling of housing markets and in supporting the creation of nuanced policies designed for specific behaviours and outcomes.

Acknowledgements

I am grateful to the large number of people who have supported me through this research project. My thanks must first go to the research participants who gave up their time for no financial benefit and without whom this research would have been impossible.

Craig Watkins and Cath Jackson have been a wonderful support ever since I first studied in the department, and I am very grateful to them both for the way in which they have supervised this research. As events have unfolded throughout this PhD, they have time and again given me freedom to support my family, to pursue my own intellectual interests and yet have also returned my gaze to the core issues in housing search behaviour. I could not have done this without them. But, every error in this research remains my own.

The conversations I have had with colleagues have challenged and refined my thinking regularly. I am particularly grateful to Ed Ferrari and the Critical Friends research associates. I am also grateful to John Henneberry and Aidan While for freeing my time to finish writing this thesis. My thanks also goes to the University of Sheffield for funding me to undertake this PhD.

My debt of gratitude is substantial to a wonderful extended family, which has supported me and been the greatest influence on my attitude towards home. I am very grateful to my parents; Martyn, Joyce and Heather, who have proofread, cajoled and undertaken copious amounts of childcare. I am also grateful to my family members who have supported this endeavour, but who are not here to see this thesis in full: Geoff, Barbara, Guy and Joyce.

Six people though have done more than any others to support, love, joyfully distract, and motivate me. Kerry, Immy, Zoe, Ben, Sam and Jed, this research process would have been a lot quicker without you, but it would have been much, much less enjoyable! This thesis is for you.

Soli Deo gloria

A note to the reader

The structure of the thesis is outlined in the table of contents on page vii. As you will see it follows a broad, but standard, movement from introduction of the research topic, through philosophical perspectives and economic theory to the empirical methods, before the results of the study and conclusions are provided to finish. It will be a long route for you to take, not as long as the route taken to provide you with this thesis, but long enough. To aid your journey each chapter has a series of bullet points at the start, which flag up the key issues that will be explored in the chapter. Far be it for me to call the reader rational, irrational or procedurally rational, but heuristics often emerge for a purpose….

Table of Contents

Abstract 4

Acknowledgements 5

A note to the reader 7

List of Figures 16

List of Tables 18

Abbreviations 22

Chapter One: An Introduction to Housing Search, Behavioural Economics and Typologies 9

Key points from chapter one 9

1.1 Introduction 10

Motivation for studying housing search behaviour 12

Justification for interest in Behavioural Economics 13

Segmentation of supply and demand 14

1.2 Aim of the study 17

1.3 Research design and methods 17

1.4 Structure of the Thesis 20

Chapter Two: Behaviour and the Theoretical Context of Housing Market Analysis 29

Key points from chapter two 29

2.1 Introduction 30

2.2 Neoclassical Economics 32

2.3 Marxist economics 36

2.4 Austrian Economics 38

2.5 Institutional Economics 40

2.6 Behavioural Economics 46

2.7 Conclusion 55

Chapter Three: The Economic Structure of the Housing System and the Behaviour of Search Actors 67

Key points from chapter three 67

3.1 Introduction 68

3.2 Housing: A complex product 70

3.3 The stages of housing search 74

3.3.1 Household Formation 77

3.3.2 Decision to move 80

3.3.3 Specific attributes and dwelling search 83

3.4 Conclusion 93

Chapter Four: Behavioural Economics and Housing Search 96

Key points from chapter four 96

4.1 Introduction 97

4.2 A Neoclassical approach to housing search: Tu and Goldfinch, 1996 99

4.3 A small step away from NCE: Utility maximising under uncertainty - Smith, Clark, Huff and Shapiro (1979) 101

4.4 Simplifying choice as a departure from NCE: Speare, Goldstein and Frey, 1975 103

4.5 A NBE approach: Maclennan and Wood, 1982 105

4.6 A NBE approach, with a view to OIE: Maclennan, 1982 106

4.7 Procedural rationality with a hangover of NCE: Wong, 2002 110

4.8 Straddling the border of NBE and OBE: Marsh and Gibb, 2011 113

4.9 A pragmatic synthesis of BE for empirical exploration: Rae, 2014 117

4.10 A culturally embedded, but limited OBE approach: Levy and Lee, 2004 119

4.11 A new conceptual model of key variation within the housing search process 120

4.12 Conclusion 123

Chapter Five: Research Methods and Design 136

Key points from chapter five 136

5.1 Introduction 137

5.2 Philosophical underlabouring: the methodological framework 138

5.3 Questionnaire and Quantitative methods 145

5.3.1 Survey Design 147

5.3.2 Piloting the survey 153

5.3.3 Survey Implementation 158

5.4 Data analysis 166

5.4.1 Principal Components Analysis 168

5.4.2 Cluster Analysis 177

5.4.3 Why use PCA and CA together? 181

5.5 Case Study Approach: Where? 182

5.6 Conclusion 186

Chapter Six: Analysis of the Variation in Search Behaviour in Sheffield, 2010 195

Key points from chapter six 195

6.1 Introduction 196

6.2Housing market context, Sheffield 2010 197

6.3 Pre-search 208

6.3.1 Previous Experience 208

6.3.2 Household perceptions of the location, size and type of property 215

6.3.3 Approach to dwelling, prior to considering moving dwelling 219

6.4 Motivations for Moving 224

6.5 Aspirations 227

6.6 Time of the stages of housing search and time pressures 231

6.7 Visiting properties 240

6.8 Altered hopes at different stages 244

6.9 Information Sources 248

6.10 Outcomes and Housing Aspirations 259

6.11 Conclusion 267

Chapter Seven: Construction of a Search Typology: Combining Three Principal Components Analysis and Cluster Analysis 286

Key points from chapter seven 286

7.1 Introduction 287

7.2 CATPCA and Cluster Analysis 288

7.2.1 CATPCA variables 289

7.2.2 CATPCA Round One 292

7.2.3 CATPCA round two 294

7.2.3a PCAs component loadings 296

7.2.4 Round two CA solutions 299

7.3 Cluster Characteristics 302

7.3.1 Pre-search variables and cluster characteristics 302

7.3.2 Motivations for search and Aspirations 310

7.3.3 Search process 316

7.4 Household characteristics 324

7.5 Typology description 325

7.5 Conclusion 328

Chapter Eight: Conclusion 332

Key points from chapter eight 332

8.1 Introduction 333

8.2 Context 334

8.3 Responses to the aims and objectives of the study 335

8.4 A future research agenda 341

References 347

Appendix 378

A: Buckingham and Saunders (2004) criteria for utilisation of surveys as an appropriate research method, and responses 378

B: Key variables and previous research findings 380

C: Home Ownership Decision-making Survey – Full Questionnaire (8 pages) 386

D: Addressed return envelope 394

E: Statistics in full 395

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