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tw
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housing market as Giffen good?

September 5th, 2008, 9:38 am

There was a previous thread about oil/energy as a Giffen good.I was wondering if a similar or related thing could be happening in the housing market in the UK?Meaning because of the well known problems with mortgage securities, as the market deteriorates, with prices coming off, lenders are reacting by asking for larger and larger deposits or initial equity. I imagine that supresses demand effectively.Also I guess that also boosts the rental market, or at least gives succour to those nervous buy-to-letters.Any thoughts?
 
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Traden4Alpha
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housing market as Giffen good?

September 5th, 2008, 12:22 pm

I thought a Giffen good was an inferior good in which demand for the good was high in the presence of high unchanging prices and demand was low in the presence of low unchanging prices. That is, demand for Giffen goods is not a direct function of the rate of change of prices -- their demand pattern isn't created by speculation, hoarding, avarice, or risk aversion. Rather, it is a phenomenon in which consumers have less demand for superior goods (e.g., meat) and more demand for inferior Giffen goods (e.g, wheat) in the presence of high prices.Housing is a more complex for three reasons. First, the speculative nature of the purchase means that demand is a function of expected rate-of-change of price (unlike a Giffen good in which demand is a function of price alone). Second, housing displays a discrepancy between price actually paid by consumers (downpayment + monthly mortgage) versus the nominal asset price. Rising mortgage interest rates and rising downpayment requirements actually imply that housing has become more expensive (to consumers) in the last year even if the price on the deed of sale has fallen. Third, chary lenders have reduced the eligible home-buying population with much more restrictive credit.
 
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duranthil
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housing market as Giffen good?

September 23rd, 2008, 11:42 am

I would add one should consider housing as an asset rather than as a good, no ?
 
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duranthil
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housing market as Giffen good?

September 23rd, 2008, 11:42 am

I would add one should consider housing as an asset rather than as a good, no ?
 
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Cuchulainn
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Re: housing market as Giffen good?

July 7th, 2021, 4:45 pm

Why the United Kingdom does not have a cadastre – and does it matter?

https://www.fig.net/resources/proceedin ... grover.pdf
 
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katastrofa
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Re: housing market as Giffen good?

July 7th, 2021, 8:27 pm

Why the United Kingdom does not have a cadastre – and does it matter?

https://www.fig.net/resources/proceedin ... grover.pdf
The UK doesn't have the land ownership in the first place.
 
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Cuchulainn
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Re: housing market as Giffen good?

July 8th, 2021, 6:40 pm

Why the United Kingdom does not have a cadastre – and does it matter?

https://www.fig.net/resources/proceedin ... grover.pdf
The UK doesn't have the land ownership in the first place.
Are you thinking specifically of the Scottish crofting system?
Compare and contrast the UK 4-dimensional estate system (x,y,z,t) with the Napoleoni/Cartesian (x,y) parcel system.