As home ownership in the UK housing market has become mature, economic and econometric analyses of urban and regional owner-occupier housing markets have become a long-standing concern of housing economists. This thesis defines a nested local housing submarket structure. The dynamic stock flow model with trade friction is revised and applied to analysing the local owner occupier housing submarket operational process. The short run and long run equilibrium and discquilibrium nature of a local owner occupier housing submarket system are divulged. This model explores the submarket house price determinants and the role of housing submarket trade friction in submarket house price formation. The computer simulation reveals the relationship between the housing submarket structure and the system stability. The role of household housing choice behaviour in directing the system has been carefully demonstrated.
On the premise of the utility maximisation approach, a behavioural model of regional household housing choice per housing submarket is set up. It is argued that the structure of the regional labour market determines household dwelling location choice. The influence of housing submarket marketability (defined as an inverse of the submarket trade friction) on household housing choice behaviour is considered. The family life
cycle pattern of housing choice behaviour and the influence of household financial constraints on housing choice are also developed in the model.
The empirical analysis is based on both Stated and Revealed preference information in order to overcome the dwelling supply constraint. The data is derived from the Lothian Region owner occupier housing market. The empirical results are compared with those of the existing housing choice models. The policy implications which follow from this thesis are then discussed in the light of the findings.