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

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2.2 Neoclassical Economics

Many accounts of the history of economics suggest that Neoclassical Economics (NCE) was born in the early 1870’s (although the term was coined in 1900), through the work of three men (Carl Menger, Leon Walras and William Stanley Jevons) who each worked on separate aspects of microeconomics, equilibrium theory and consumer behaviour respectively, and are also broadly the founders of Austrian Economics (AE), as NCE differentiated its focus, becoming more mathematically, equilibrium and perfect competition driven. Some accounts also include Francis Edgeworth and the later work of Vilfredo Pareto as an instrumental foundation of neoclassical thinking, whilst others define two distinct periods, one of revolutionary thinking (ca. 1870-1890) and a second period of consolidation and acceptance in the mainstream (ca. 1890-1939) (Backhouse, 1985). However, Ekelund and Hebert (2002) have made a robust argument that the concepts and mathematical principles of NCE were widely understood prior to 1870, broadening the common picture of the NCE genesis. Whether the ideas were prevalent pre or post 1870 is not the major point, the crux here is that the conceptions of how price and markets work fundamentally shifted from the classical view of value depending on the cost of production to the neoclassical view that ‘value’ is dependent upon the relationship between the purchaser and the object during the latter half of the nineteenth century (Weintraub, 2002)8.

The key assumptions in NCE, which are of relevance here, are those relating to decision making and consumer behaviour. In this sense NCE may be seen as an attempt to summarise the fundamentals of human behaviour in the form of utility maximisation. Humans are essentially hedonists, pursuing maximum personal gain from each economic decision (Heinrich et al., 2001). NCE includes constraints on the individual, such as prevailing price, which the individual cannot affect. Utility maximisation argues that individuals make rational choices between the type and number of products they consume in order to maximise their satisfaction. Humans are essentially determined by economic considerations, in which political, social and aesthetic influences are no more than subsets of utility maximisation (Wallace, 2004).

In the pursuit of utility maximisation, humans have access to and are able to compute all necessary information. Once the situation they are living in no longer provides the maximum utility of all possible options, they will adjust their accommodation to match their desires. The adjustment through the housing market moves the household from one state of maximum utility to another. The assumption is that households are able to instantaneously compute what their preferred outcome will be in the housing market regardless of the complexity of the market or the decision. Thorstein Veblen teasingly described the abilities of this rational human:

“The hedonistic conception of man is that of a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact. He has neither antecedent nor consequent. He is an isolated, definitive human datum, in stable equilibrium except for the buffets of the impinging forces that displace him in one direction or another. Self-imposed in elemental space, he spins symmetrically about his own spiritual axis until the parallelogram of forces bears down upon him, whereupon he follows the line of the resultant. When the force of the impact is spent, he comes to rest, a self-contained globule of desire as before.” (Veblen, 1899, P.73)

Veblen’s criticism of hedonistic human ability, in the NCE sense, is not limited to its reduction of computational complexity, but also to the causes of desires and wants. Veblen argues that humans in NCE are total individuals, with discrete desires and whilst impacted upon by market forces, their preferences and aspirations are not (Hodgson, 1998a). Tomer (2001) identifies five key attributes of economic man: ultimately interested in providing satisfaction for themselves; mechanistically rational in comparing potential satisfaction from a range of goods; separated and distinct from other actors and the physical world; preferences and character are stable; and satisfaction processing is the dominating thought process (i.e. no reflection on morality unless this is a factor in satisfaction). Given these characteristics it is possible to make some assumptions about the outworkings of the market. The outcomes of exogenously determined preferences are determined by changes in relative price and not by changes in the preference structure of households (McMaster and Watkins, 1999). The sum of individual’s hedonistic actions are able to be aggregated to explain social phenomena (Ball et al., 1998), using for example hedonic regression analysis as the outcomes of their choices reflect the maximum utility gained.
There is a wide consensus that many NCE analyses are based upon rational choice, with the purpose of growing a technical rather than theoretical improvement. The NCE approach is elegant in its ability to waive messy accounts of human behaviour in favour of explaining outcomes. This enables a mathematical purity (divorced from the experiences of decision makers) to explain and predict future outcomes. Yet these technical studies, whilst based on flawed behavioural assumptions, have still arguably contributed much to understanding housing markets (Wallace, 2004; Ferrari et al., 2011a). The following section explores four of the major assumptions in NCE pertaining to housing search: perfect knowledge; perfect competition; equilibrium; and the discrete exchange framework.

Perfect Knowledge

Each individual is imbued with complete knowledge of the options available to them and the prevailing price for each option, and information about changes in prices are transmitted instantly and uniformly. This knowledge allows the individual to weigh up every possible outcome and select the most fulfilling options. Individual optimisation is only possible if they can use this perfect knowledge to discount future gains, i.e. the future is predictable. Without the ability to predict the future benefits of purchasing a dwelling it is impossible to undertake a rational cost benefit analysis. The second assumption regarding perfect knowledge is that there is equality of information within the group of potential purchasers and across the supply side. That housing markets are informationally efficient has been repeatedly disproved (Cho, 1996). Perfect knowledge is impossible in a market with information asymmetries and prevents perfect competition because demand will be constructed according to aggregate advantages and disadvantages, which will not be universally understood. Bid prices will therefore not compete for a product, rather for a variation in perceived benefits, where the highest price will not necessarily arise from the bidder with most complete knowledge. Where a household has perfect knowledge of the options available for purchase, the search process is less interesting. Indeed, under these conditions the search process becomes largely obsolete. That house prices reflect full information in the purchase process has been rejected by a growing number of studies (e.g. Case and Shiller, 1989; Rouwendal and Longhi, 2009)


Equilibrium is important at both micro and macro level studies in NCE. This abstraction assumes that supply and demand are balanced at each level of the market (Wallace, 2004). In housing terms this means that at a given price there are enough properties available to satisfy demand, with no excess stock remaining, i.e. the market clears quickly . Some research has attempted to integrate a more refined concept of equilibrium arguing that prices adjust very slowly (DiPasquale and Wheaton, 1994). McMaster and Watkins (1999) consider both dynamic models and partial equilibrium models and argue that the premise remains that the market naturally is moving towards a state of equilibrium, even if in multiple forms.

Discrete Exchange Framework

The discrete exchange framework within NCE assumes that there is no relationship between vendor and buyer. This assumption may hold true with many economic examples, for example the purchase of a souvenir by a tourist, yet is not self-evident in the case of housing. The importance here is that neither vendor nor buyer’s relationships get in the way of undertaking a smooth transaction where rights are clearly defined. In housing the intermediary role of estate agents, who may relate to both parties for considerable time periods questions this assumption. Over the course of the relationship parties may hold greater power or lesser power, which may or may not fluctuate according to circumstances. As actors are aware of these power relations their ability to maintain a discrete exchange wanes.

In an attempt to understand and model housing markets NCE views the actions and abilities of purchasers and suppliers in a reductionist manner. These reductionist assumptions are neither logically deduced nor empirically proven (Maclennan, 1977). Whilst NCE models have provided useful conceptual frameworks, where these abstractions are shown to be in error the model cannot accurately represent or predict reality (Maclennan and Tu, 1996).

Two options are available, to incorporate the limitations of abstractions, or to change the view of the housing market away from a traditional NCE analysis (Smith et al, 1988). In defence of retaining NCE as a useful tool, Gibb (2009) argues that there are three reasons not to reject it yet. First, empirical research using NCE theory bears a remarkable resemblance to outcomes. Second, NCE is and has been adapted to improve the insights available. Third, NCE can be used to ask counter factual questions about policy, for example the pluperfect subjunctive question; if income tax had been raised what would have happened to housing demand (Frank, 2008)? With this in mind, neoclassical economics should only be dismissed as an avenue for further discussion if a more complete model is available, one which makes less theoretically flawed assumptions about the behaviour of individuals.

2.3 Marxist economics

Marxist Economics (ME) was founded with the writings of Karl Marx in the 19th century, in response to perceived errors in the classical school (Marxian Economics seeks to retain Marx’s concepts, whilst ME develops the ethos (Luithlen, 1992). ME, built upon the methodological foundations of historical materialism; the mode of production; the class struggle; and the theory of value, it views the behaviour of households in the housing market as part of a wider structural framework (Arvanitidis, 2015­). Whilst not the only school to adopt a structuralist approach, ME like others, argues that the housing system and outcomes of the housing choice process are contingent upon underlying social relationships shaped by historic and spatial circumstances (Lawson, 2012). Historical materialism contends that any changes in society are based on resolutions of inter group conflict for collective resources; therefore emerging structures in the housing market reveal bouts of contestation.

Given the focus on structures, there is less research from a ME perspective on the individual search process, or agency in the owner-occupation housing market. The role of housing consumption, as a mechanism for class identification and separation provides an explanation for differences in housing outcomes (e.g. segregation), as households seek to identify with particular classes through the built form (Clapham and Kintrea 1984; see also Bourdieu, 2005, although his research may not be considered Marxist, it pertains to the structuralist tendencies prominent in ME research on housing markets). Preferences come from the consciousness of the individual which is entirely class determined, and antagonistic towards all other classes (Arvanitidis, 2015). The structures of other markets, such as the geographic availability and distribution of housing finance are likely to determine the outcomes of housing decisions in the housing market. The deterministic approach of ME suggests that individuals play very little role in determining their own futures, and indeed therefore the housing market itself is only the outworking of other social clashes, and is not intrinsically of interest beyond the standard characteristics of a commodity.

“In many respects, the Marxist-inspired housing research that has emerged over the past 15 years constitutes a fundamental break with the views of the traditional social sciences. No longer is society seen as a collection of autonomous individuals whose pre-given wants must be satisfied from limited resources. The voluntarism inherent in such conceptions of society, where individuals and the state are always conceived as choosing options subject to constraints, is rejected. Developments within societies are determined instead by social conflicts whose contents are fundamentally influenced by the dynamics of the dominant mode of production. The situation of individuals, the nature of their needs, and the extent to which they are satisfied all depend in a variety of ways on the characteristics of the general social dynamic.” (Ball, 1986, P. 155)

Variation therefore in the housing search process is reflective of class divisions and capitalist pressures on land values and the identification of individual households with wider social groups. Structuralist approaches pay close attention to social trends and historical movements, but (arguably) pay less attention to the individual decision maker.

2.4 Austrian Economics

The genesis of Austrian Economics (AE) is normally attributed to the work of Carl Menger in the 1870’s and emerged as a response to the German Historical School (Butler, 2010). The initial differentiation between the two schools was methodological, with the AE architects arguing that theoretical knowledge should be the source of economic analysis rather than economic history (Taylor, 1980). Menger’s principal contributions to the discussion were to highlight that value was subjective rather than an inherent value in the good, and therefore reflected the subjective satisfactions of the seller and highest bidder, and that people seek their most urgent needs first before moving on to satisfy less urgent wants if it is possible (marginal utility). The price a dwelling achieves on the open market therefore is contingent on the subjective valuations of the individuals involved in the transaction and therefore is place and time specific. It also reflects competition between the primary desires and wants of individuals and their ability to satisfy secondary wants. The significance of the individual therefore led the AE school into a methodological individualism from which it is possible to aggregate up to trends in society, but these are rarely evident from simple analysis of macro level trends (Butler, 2010).

In AE, human rationality differs from the supra-rationality of NCE, rather it is an individualised purposeful process of moving towards a goal. This means that there is logical explanation for human action (i.e. it is not random or meaningless), but that it may be imperfect, based on flaws in either knowledge or cognitive foresight (Rozeff, 2006). Given the information deficit, uncertainty over the future and complex balance between hope and fear AE does not consider humans capable of making consistently optimizing decisions (Jaffe, 1976; Langlois, 1985).

The focus on the individual, personalised valuations and choice are key themes in AE, and are frequently the focus of studies rather than the aggregated outcomes of economic processes. The focus on explanation rather than prediction is in sharp contrast to the mainstream approach, which (sometimes unfairly) is frequently caricatured as caring only about accurate prediction and not about the accuracy of understanding of the process. It is also very different from ME approaches: the individual is not determined by external forces and wider social trends, instead they are an independent actor with unique motivations and unique perspectives of the utility of a dwelling. Each person’s opportunity cost will vary too, therefore not only will financial costs be different, but individuals approach to the housing search process will be varied as they value time and effort independently.

Because of the role of individual valuations and opportunity costs, prices act as signals of the common willingness to exchange goods for cash (rather than underlying costs of production or ‘market values’ for example). These signals are not precise as each transaction is unique, and therefore markets and indeed competition between actors in the housing market is a process of discovery, rather than a priori understanding.

“Lachmann (1986) stresses the contrast of neoclassical and Austrian perspectives on markets. The economics of Hayek, Von Mises and others emphasises the subjectivity of decision, the complexity of processes and the multitude of networks or connections within a (single) market. That more micro, even messy, view of markets forms a useful contrasting intellectual standpoint to the Walrasian synthesis. Modern economic psychology and political economy would not necessarily finish with the same subjectivist assumptions and free-market conclusions as the Austrians (Anderson, 1996). But their emphasis on real market processes remain valid. After the Walrasians it was only the relatively disregarded Austrians who stressed the nature of markets as real discovery processes (Langlois, 1986).” (Maclennan, 2012, P.7)

Austrian Economists are largely dismissive of planned economies, because only through the transaction process can the price of a good be confirmed, and therefore the relative priority for satisfying people’s demands (marginal utility). They argue that, as all human logic is flawed, no politician or policy maker should have the ability to persuade others to take a particular form of action (i.e. no behavioural intervention is permitted), as this is equally likely to be flawed (Rozeff, 2006). The focus in AE on the individual has been rejected by many economists and social theorists as reductionist because it fails to account for key social trends and the limitations of individuals’ abilities to maximise their subjective utility. The individual’s housing search process therefore doesn't relate to wider social trends of search behaviour, which is normatively problematic for policy related research and dismissive of relational components of pre-search understandings of the market and of the role of institutions in influencing search behaviours.

2.5 Institutional Economics

Institutional Economics (IE) is a broad school of economic thought, but coheres around the role of institutions as the fundamental concept in economic analysis (Arvanitidis, 2015). The IE critique of NCE is often built upon the work of Thorstein Veblen John Commons, Wesley Mitchell and Clarence Ayers, who wrote in the latter 19th and early 20th century (Rutherford, 2001). Veblen himself did not challenge his contemporaries’ classical presuppositions to the extent his later advocates have purported, in part because of the realignment of focus in the movement from classical to NCE schools. Veblen’s fundamental argument was to situate economic questions, and in particular production, within the wider social, cultural, spatial and historic context (Veblen, 1919), and how individuals both conform to institutional norms and mutate them (Veblen, 1909). The economy therefore is more than simply the pure market conceived in NCE, as the market imbibes the values and norms of the institutions that act in them and are embodied by them (Samuels, 1995).

Hodgson (2000) and Rutherford (2001) cite Walton Hamilton as the original source of the term ‘Institutional Economics’, as a refocusing of economic theory away from the outcomes of independent rational utility maximisers, towards an interest in the mechanisms of exchange and the role of external influences on human behaviour in the exchange process.

“According to Hamilton [1919, 314-318], institutional economists recognized that:

The proper subject-matter of economic theory is institutions….Economic theory is concerned with matters of process….Economic theory must be based upon an acceptable theory of human behaviour…

This was expanded by the following observations:

neo-classical economics…neglected the influence exercised over conduct by the scheme of institutions…Where it fails, institutionalism must strive for success…it must discern in the variety of institutional situations impinging upon individuals the chief source of differences in the content of their behaviour [1919,318].” (Hodgson, 2000, 317)

The focus in IE is therefore on the role of social norms and institutions in shaping (constituting) the preferences and actions of buyers and sellers. Tomer (2001) identifies the difference between IE’s approach to economic man to NCE’s approach as:

“Recall that EM [Economic Man] is self-interested, rational, unchanging and separate. To begin, IEM [Institutional Economic Man] does not have a given, unchanging character like EM. IEM behaves in line with habits and rules, is strongly influenced by institutions and learns from his social and technical experience” (Tomer, 2001, P.287)

This type of definition of IE, alongside the one provided by Hamilton, is a broad definition, which has been criticised for appearing as if it is all things to all people (Guy and Henneberry, 2000). Masahiko Aoki (in Menard, 2000), elaborating on North’s analysis of institutionalism, considers three extensions in detail of this definition. First, institutions have been regarded simply as organisational establishments. Second, institutions can be seen as the formal or informal ‘rules’ of economic interaction, which actors abide by. The third definition sees agents in the market as recursive ‘rule makers’ who shape and are shaped by the processes of economic interaction. When an agent approaches an economic decision they have the ability to adapt, break or create rules.

There is some disagreement about the precise definitional focus of IE. As with NCE, IE resultantly is not a unified school of economic thought. Many commentators argue that there are two major groups of IE research, broadly ‘Old’ and ‘New’ (Hodgson, 1998b; Dequech, 2002; Kauko, 2012).

Old Institutional Economics

Old Institutional Economics (OIE) is concerned with the specific social and cultural context of housing markets. OIE makes a clear break from the tenets of NCE, especially methodological individualism, maximising economic behaviour and static equilibrium states (Arvanitidis, 2015). Hodgson (2000, re-working Hamilton’s definition of institutionalism) suggests there are five main propositions in IE, but that there is one key proposition that differentiates OIE from the later NIE. The refuted proposition is that the NCE tenet that individual agents are utility maximisers should be rejected. In OIE individuals’ preferences (for both outcomes and processes) are not independent, but are “molded by cultural or institutional circumstances” (Hodgson, 2000, P.327). Commons definition of IE was that of collective action controlling individual action (Commons, 1934), in other words the cultural norms in a society determined individual preferences, and in the case of this research the housing search process. The focus, therefore is not simply on the outcomes, but on the habits of buyers and sellers as well as customs that are spatially and temporally located, in part through the history of agency and the evolution of institutions (Gibb, 2012).

“Habit, inertia and routine behaviour are central to the older institutionalist framework (Hodgson, 1997). This is closely related to the social dimension of consumption, harking back to Veblen (1899) but also Dusenberry” (Gibb, 2012, P. 133)

OIE argues that the framing of both questions about dwelling ownership and housing search and responses to these questions are defined by institutions (Kauko, 2012).

“OIE approaches are propagated as versatile attempts to explain behaviour based on social, political, administrative and cultural factors that constitute external conditions as well as internal non-economic determinants of the market process.” (Kauko, 2012, P. 159)

There has been some criticism that OIE is incomplete as a conceptual framework because it is too broad (Kauko, 2012) and methodologically imprecise (Langlois, 1989). This flaw, combined with the rise of positivist NCEs with its simplistic axioms and mathematical precision, caused a shift and simplification in the focus of institutional economics towards a new version (Hodgson, 1998b).

Smith et al (2006), from an OIE perspective, explore the relationship between property professionals and the ‘market’ in Edinburgh using a cultural economy and economic sociology approach. In-depth interviews with 20 professionals forms the basis of the research. Smith et al build upon Callon’s (1998) explanation of the performance of markets rather than economics as an explanation of its function and Miller’s (2002) explanation of economics as a virtual market, not led by forces but by belief in those forces. Interviewees believed broadly in the role of economic forces that mainstream economic theory was played out in reality regardless of their actions. Concepts of supply and demand and the rational hand determining prices was evident throughout the market. However, attempting to abide by the rules of neoclassical economics Smith et al suggest led actors to act in a way that made the market perform in a manner inconsistent and unpredictable when compared to normal macro-economic factors.

“Far from being the economy, markets have to be made ‘economic’, through a complex interplay of cultural, legal, political and institutional arrangements.” (Smith et al, 2006, P.95)

Smith et al end by arguing that no longer is a qualitative look at the ideas, behaviour and cultural context opposed to economic thought, rather including them will provide a richer understanding of what housing markets actually are and what they should be.

Wallace (2008) expands on the call for greater pluralism in housing market research and takes a cultural-economy approach. The research comprise of 40 interviews with key actors in the buy to let new build housing market in York. Wallace found that there was a culture of using NCE theory to describe the market, although, in practice many of the agents relied on intuition or feeling rather than using a NCE assessment of the levels of supply and demand. This relationship between perceptions and practice raises questions for Wallace about the validity of using traditional NCE theory to explain or predict market behaviour. Wallace provides the example of estate agents sharing their understandings of the market, which often conflicted. Despite these conflicting perceptions of how the market was performing, other instances occurred where estate agents acted together to change the way in which the market was perceived by other actors, such as investors or potential renters. Wallace builds upon Miller’s (2002) argument that actors perform markets rather than perform within them.

McMaster and Watkins (1999) expand on the potential of OIE in housing studies. Housing models in the UK have traditionally assumed that these institutional influences are fixed, and essentially determined by economic reasoning, yet there has been no attempt to show to explore variation in these routines of purchasing behaviour. Indeed if there are different institutions between cultures, there is also a case for exploring variation in the routines and rules of economic interactions within cultures in single markets (McMaster and Watkins, 1999).

New Institutional Economics

New Institutional Economics (NIE) is guided by the principle that institutions emerge to reduce frictions and uncertainties collectively regarded as transaction costs (North, 1990). Jaffe’s (1996) work on transaction costs and housing markets focuses on contractual issues as key costs and rights in explaining housing markets, identifying: listing agreements; sales contracts; mortgages; leases; and management agreements are significant in the performance and constraint of markets.

NIE as a term was coined by Oliver Williamson (1975) and is often referred to as originating in the work of Williamson along with Ronald Coase and Douglas North (Rutherford, 2001). It is conceptually narrower than OIE, in that it does not seek to replace the axioms of NCE, but is an extension to NCE following its methodological individualism, but incorporating issues of rights, costs and norms (Klein, 1990)9. Coase (1984) argued that NIE was errant in assuming that human action was rational, however this call has not resulted in a shift in most NIE approaches to rationality. Institutions are not only reinforced through practice, giving certainty and stability to social interaction, but also change and develop over time according to circumstances and experience (D'Arcy and Keogh 2002). That is, the NIE approach stresses that individual identities and preferences are actively constructed in social contexts, distinguishing it from NCE which assumes actors with rational preferences to maximise their utilities (Healey 1999).

Given the relational approach, it is acknowledged that systems are not given, but are made, in a complex interaction between the imaginary and the material world. That is, it leads that attitudes and values are also formed through the particular contexts of geographies and histories (Healey 1999). Therefore, values in NIE are not related to the cost of production directly, but are achieved in the way of being embedded in institutions, social structures and behaviour, and becoming the cultural underpinnings of everyday life (Samuels 1995).

Social constructions are not a neutral process as power is apparent in social and political relations (Samuels, 1990; Healey 1999). In other words, the distribution of resources is ultimately determined not by simple market mechanisms, but institutions which are structured by power. New Institutional Economics, therefore, focuses on the allocation of power in society and markets to pay attention to the perspectives and values of the working class and masses, retaining some distance from established powers (Samuels 1995).

Adams et al. (2005) summarise the relationship between institutionalism and housing markets at a theoretical level:

“Although regarded as a social institution, the market is not considered by institutional theory to be a single uniform entity. Indeed, a strong disaggregated view is taken of market structures, with each particular market seen as having its own routines and procedures alongside its own distinctive relations with a particular social culture and other institutions.” (Adams et al., 2005, P.39)

Healey’s (1992) IE theory (following Giddens [1984] structuration theory) of the property development process is an attempt to provide a universal analysis of development. Healey explores the social relationships between agents during the development process and in the analysis explains the instability of institutional relations as a cause of the frequent breakdown in partnerships. Ball’s (1998) critique of Healey’s work is that it minimises economic fundamentals, which may have a greater impact than relationships. The dichotomy between institutions and economics is errant according to Ball’s (1998) Structures of Building Provision theory, which argues that there is a continuum between (mainstream) economics and institutions.

Guy and Henneberry also provide a critique of Healey’s work (2000), drawing out the lack of meso level theory linking the local framework and wider economic processes, which they argue can be explained realistically from a macro economic perspective. They conceive of property markets not as a continuum of economic and institutionalism (as Ball does), rather as “two interrelated aspects of a wider process of urban change in which structure and action are recursively linked” (Guy and Henneberry, 2000, P.2405). They use the example of irrational investor preoccupation with investment in London and the South East of England, in which according to NCE, investors will conclude that they acted irrationally and would soon change their behaviour. Yet, research (Rowley and Henneberry, 1999) suggests that although investors are aware of the NCE mantra, they refuse to change their investment patterns. The discovery requires an explanation built upon two spheres of social relations and economics.

Institutionalism takes a multitude of forms and embraces a plethora of complexity, yet, or perhaps because of this it is an ill-defined perspective and offers only generalisable policy solutions. Since the 1960’s Institutional theories have had little influence on the nature and direction of housing policy. Research into institutional aspects of housing faces a particular challenge to develop operationalisable models that have sufficient specificity over processes and outcomes to be useful. Institutionalism has led to the operationalization of other perspectives in housing demand studies including behavioural economics (Gibb, 2012). Institutional Economics’ emphasis on the cultural and legal institutions that influence the aspirations and behaviour of actors in the housing market struggles to explain behaviour that is not inline with the norms in society.

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