Macroeconomic and Demographic Determinants of London Housing Prices: A Pre- and Post-Brexit Analysis
Abstract
1. Introduction
- How did interest rates, inflation, and construction costs impact London’s housing prices?
- What role did demographic factors, such as population growth and migration patterns, play in shaping market trends?
- Were there distinct variations between cash purchases and mortgage-backed purchases in response to economic changes?
2. Data Collection and Sources
- The Greater London Authority: Population and labour market statistics specific to London.
- The UK Office for National Statistics (ONS): GDP growth, inflation (Consumer Price Index including Owner Occupied Housing Costs in All items—CPIOOHC), interest rates, net migration, and employment and unemployment figures.
- The Bank of England: Historical interest rate base rates.
- The National House-Building Council: Data on new builds, housing starts and completions.
- The UK Land Registry: Housing price indices (HPI) for different market segments.
2.1. Dependent Variable
- HPI—Cash Purchases
- HPI—Mortgage Purchases
- HPI—New Builds
- HPI—All Property Types
- HPI—First-Time Buyers
- HPI—Former Owner-Occupiers
2.2. Independent Variables
- Macroeconomic Indicators:
- UK GDP Growth (%)—quarterly growth rate to capture economic activity.
- Consumer Price Index including Owner-Occupied Housing Costs (CPIOOHC, %)—inflation measure.
- UK Interest Rate Base Rate (%)—indicator of monetary policy and borrowing costs.
- Construction Output Price Indices (COPI, %)—proxy for housing supply costs.
- Trade Balance (£ millions)—the UK’s total exports minus total imports.
- Demographic Indicators:
- London Population (millions)—capturing housing demand fluctuations.
- Net Migration (thousands)—proxy for international demand for housing.
- London Median Pay (£)—reflecting wage growth and affordability.
- Total Employment in London (thousands)—indicating workforce growth.
- Unemployment in London (thousands)—assessing job market fluctuations.
- Housing Supply Variables:
- New Build Housing Starts (thousands)—indicator of supply expansion.
- Housing Completions (thousands)—capturing realised supply additions.
2.3. Rationale for Excluded Variables
2.4. Biases of Data
- Data Collection Bias:
- Timeframe Bias:
- Selection Bias in Housing Price Index (HPI):
- Exclusion of Microeconomic Factors:
- Migration Data Limitations:
- Monetary Policy Impacts:
- External Economic Influences:
- Mitigation Strategies:
- The study incorporated multiple sources to cross-validate key macroeconomic indicators.
- Adjustments were made using base quarter recalibrations to account for structural shifts in the housing market pre- and post-Brexit.
- Limitations were acknowledged, and future research directions were proposed to incorporate additional microeconomic factors and extend the timeframe of analysis.
3. Multiple Regression Analysis
- y = β0 + β1x1 + β2x2 +…+ βpxp + ϵ
- Y = dependent variable
- β0 = represents the intercept
- β1, β2, ….βp= represent the coefficients of the independent variables x1, x2…xp
- x1, x2…xp = represent the independent variables in the model
- ε = represents the error term
- β0 and β1 = represent the regression coefficients in the model [27]
3.1. Correlation Coefficient
3.2. Descriptive Statistics
3.3. Multicollinearity
3.4. Base Quarter Adjustment
3.5. Correlation Matrix
3.6. Log Transformation
3.7. Goodness of Fit
3.8. Model Selection
3.9. Regression Analysis Results
3.10. Regression Equation
+ b5 X5 + log10,000 (b6 X6) + log10,000,000 (b7 X7) + log1,000,000 b8 X8 + b9 X9
+ b10 X10 + b11 X11 + b12 X12 + ε
4. Results and Discussion
4.1. Model Selection
4.2. Statistical Significance
5. Research Limitations and Further Research
6. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
Abbreviations
COPI | Construction Output Price Indices |
COVID-19 | Corona Virus Disease 2019 |
CPIOOHC | Consumer Price Index including Owner-Occupied Housing Costs—in All items |
EU | European Union |
GDP | Gross Domestic Product |
HPI | House Price Index |
Log | Logarithm |
MLR | Multiple Linear Regression |
MRA | Multiple Regression Analysis |
ONS | Office for National Statistics |
Q1-Q4 | Quarter 1–4 |
UK | United Kingdom |
VAR | Vector Autoregression |
Appendix A
A/A | Symbol | Variable | Expected Sign |
---|---|---|---|
1 | London Population | London population | (+) |
2 | Net Migration | UK Net migration | (+) |
3 | GDP | Quarterly growth rate of Gross Domestic Product (GDP) in Chained Volume Measure (percentage) | (+) |
4 | IR Base Rate | Bank of England Interest rate base rate (percentage) | (-) |
5 | CPIOOHC in All Items | Consumer price index occupiers’ housing costs in All items ANNUAL RATE 00: ALL ITEMS 2015 = 100 | (+) |
6 | London Pay | London median pay from PAYE (sterling pounds) | (+) |
7 | Employment | Total in employment | (+) |
8 | Unemployment | Unemployed (’000s) | (-) |
9 | COPI | Construction Output Price Indices Housing (public and private) percentage change over 12 months | (+) |
10 | UK Trade | UK Trade in goods and services in UK quarterly at current market prices. | (+) |
11 | All starts | All starts of dwellings | (+) |
12 | All completions | All Completions of dwellings | (+) |
HPI Cash Purchases | HPI Mortgage Purchases | HPI First-Time Buyers | HPI Former Owner-Occupiers | HPI New Build | HPI Existing Properties | London HPI all Property Types | London Population | Net Migration | GDP: Quarter on Quarter Growth: CVM SA% | IR BASE RATE | CPIOOHC in All Items | London Median Pay from PAYE | Total in Employment | Unemployed (’000s) | COPI | Trade Balance | All Starts | All Completions | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mean | 105.399814 | 107.586018 | 106.9279098 | 107.316312 | 106.5077039 | 107.306089 | 107.059501 | 8,789,888.94 | 288,235.294 | 0.46470588 | 0.53941176 | 2.35588235 | 2173.43137 | 4,474,047.88 | 255,786.991 | 2.27843137 | −7136.61765 | 39,108.8235 | 39,423.8235 |
Standard Error | 1.25546886 | 1.17652624 | 1.251109251 | 1.11833076 | 1.458514341 | 1.14181657 | 1.19213779 | 16,089.375 | 27,427.3651 | 0.82418741 | 0.08698345 | 0.39255984 | 34.7571877 | 25,261.1414 | 7614.50382 | 0.27486968 | 1419.91933 | 1226.37233 | 1164.41902 |
Median | 104.33775 | 105.1893 | 105.02105 | 104.9998 | 105.507 | 105.21985 | 105.00955 | 8,804,769 | 256,500 | 0.55 | 0.5 | 1.8 | 2139.83333 | 4,525,527.54 | 250,595.349 | 2 | −7352 | 40,300 | 39,855 |
Mode | 8,659,545 | 296,000 | 0.6 | 0.5 | 0.4 | 0.83333333 | |||||||||||||
Standard Deviation | 7.32057852 | 6.86026792 | 7.29515786 | 6.52093287 | 8.504526959 | 6.65787749 | 6.95129813 | 93,816.3719 | 159,927.646 | 4.80579715 | 0.50719634 | 2.28899755 | 202.66749 | 147,296.5 | 44,399.8055 | 1.60275189 | 8279.48132 | 7150.91804 | 6789.67131 |
Sample Variance | 53.5908698 | 47.063276 | 53.2193282 | 42.5225655 | 72.3269788 | 44.3273327 | 48.3205457 | 8,801,511,631 | 2.5577 × 1010 | 23.0956863 | 0.25724813 | 5.2395098 | 41,074.1113 | 2.1696 × 1010 | 1,971,342,725 | 2.56881363 | 68,549,810.8 | 51,135,628.9 | 46,099,636.5 |
Kurtosis | −1.37618393 | −1.37415893 | −1.365512642 | −1.36534857 | −1.191668152 | −1.37370029 | −1.3745554 | 0.83652425 | 2.14141945 | 14.3849872 | 12.2352656 | 3.65726389 | −0.48021133 | −0.95018176 | −0.03904075 | −1.226331 | 1.38849642 | 1.73425652 | 2.65949113 |
Skewness | 0.08063154 | 0.20844046 | 0.163620778 | 0.20465641 | −0.071032508 | 0.23107831 | 0.18399634 | −1.166636 | 1.45204828 | −1.24916757 | 3.05994313 | 2.02195281 | 0.71724042 | −0.5827409 | 0.23325986 | −0.10362219 | −0.0655317 | −0.77277229 | −1.01136061 |
Range | 22.919 | 22.4207333 | 23.7172 | 20.9974 | 26.48353333 | 21.5121333 | 22.5448003 | 342,551 | 710,000 | 37.1 | 2.71 | 9.1 | 716.333333 | 471,404.133 | 197,777.299 | 5.13333333 | 40,035 | 36,960 | 34,760 |
Minimum | 93.75 | 96.45 | 95 | 96.975 | 92.25 | 96.8 | 95.7999998 | 8,547,192 | 35,000 | −20.3 | 0.1 | 0.3 | 1922.66667 | 4,180,193.45 | 165,159.957 | −0.63333333 | −26,245 | 17,690 | 16,640 |
Maximum | 116.669 | 118.870733 | 118.7172 | 117.9724 | 118.7335333 | 118.312133 | 118.3448 | 8,889,743 | 745,000 | 16.8 | 2.81 | 9.4 | 2639 | 4,651,597.58 | 362,937.256 | 4.5 | 13,790 | 54,650 | 51,400 |
Sum | 3583.59367 | 3657.9246 | 3635.548933 | 3648.7546 | 3621.261933 | 3648.40703 | 3640.02303 | 298,856,224 | 9,800,000 | 15.8 | 18.34 | 80.1 | 73,896.6667 | 152,117,628 | 8,696,757.71 | 77.4666667 | −24,2645 | 1,329,700 | 1,340,410 |
Count | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 | 34 |
London Average Price All Property Types | HPI Cash Purchases | HPI Mortgage Purchases | HPI First-Time Buyers | HPI Former Owner-Occupiers | HPI New Build | HPI Existing Properties | London HPI All Property Types | London Population | Net Migration | GDP: Quarter on Quarter Growth: CVM SA% | IR BASE RATE | CPIOOHC in All Items | London Median Pay from PAYE | Total in Employment | Unemployed (’000s) | COPI | Trade Balance | All Starts | All Completions | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CV= | 6% | 7% | 6% | 7% | 6% | 8% | 6% | 6% | 1% | 55% | 1034% | 94% | 97% | 9% | 3% | 17% | 70% | −116% | 18% | 17% |
London Average Price All Property Types | HPI Cash Purchases | HPI Mortgage Purchases | HPI First-Time Buyers | HPI Former Owner-Occupiers | HPI New Build | HPI Existing Properties | London HPI All Property Types | London Population | Population | Population Per Hectare | Population Per Square Kilometre | Net Migration | British | EU | Non-EU | GDP: Quarter-on- Quarter Growth: CVM SA % | GDP (Average) Per Head, CVM Market Prices: SA | IR BASE RATE | CPIOOHC in All Items | London Median Pay from PAYE | All Aged 16 to 64 | Total in Employment | Employment Rate (%) | Unemployed (’000s) | Unemployment Rate (%) | All Starts | All Completions | COPI | Trade Exports | Trade Imports | Trade Balance | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
London Average price All property types | 1.000 | |||||||||||||||||||||||||||||||
HPI Cash purchases | 0.994 | 1.000 | ||||||||||||||||||||||||||||||
HPI Mortgage purchases | 0.999 | 0.990 | 1.000 | |||||||||||||||||||||||||||||
HPI First-time buyers | 0.999 | 0.995 | 0.998 | 1.000 | ||||||||||||||||||||||||||||
HPI Former owner-occupiers | 0.998 | 0.989 | 0.998 | 0.995 | 1.000 | |||||||||||||||||||||||||||
HPI New build | 0.956 | 0.954 | 0.956 | 0.964 | 0.943 | 1.000 | ||||||||||||||||||||||||||
HPI Existing properties | 0.999 | 0.991 | 0.999 | 0.996 | 0.999 | 0.941 | 1.000 | |||||||||||||||||||||||||
London HPI All property types | 1.000 | 0.994 | 0.999 | 0.999 | 0.998 | 0.956 | 0.999 | 1.000 | ||||||||||||||||||||||||
London population | −0.258 | −0.334 | −0.232 | −0.269 | −0.237 | −0.157 | −0.259 | −0.258 | 1.000 | |||||||||||||||||||||||
Population | −0.624 | −0.687 | −0.601 | −0.637 | −0.596 | −0.581 | −0.610 | −0.623 | 0.843 | 1.000 | ||||||||||||||||||||||
Population per hectare | −0.624 | −0.687 | −0.601 | −0.637 | −0.596 | −0.581 | −0.610 | −0.623 | 0.843 | 1.000 | 1.000 | |||||||||||||||||||||
Population per square kilometre | −0.624 | −0.687 | −0.601 | −0.637 | −0.596 | −0.581 | −0.610 | −0.623 | 0.843 | 1.000 | 1.000 | 1.000 | ||||||||||||||||||||
Net Migration | −0.340 | −0.342 | −0.339 | −0.366 | −0.300 | −0.514 | −0.305 | −0.340 | 0.045 | 0.326 | 0.326 | 0.326 | 1.000 | |||||||||||||||||||
British | −0.598 | −0.603 | −0.594 | −0.622 | −0.558 | −0.712 | −0.566 | −0.598 | 0.262 | 0.619 | 0.619 | 0.619 | 0.808 | 1.000 | ||||||||||||||||||
EU | 0.702 | 0.749 | 0.686 | 0.722 | 0.667 | 0.721 | 0.681 | 0.702 | −0.679 | −0.929 | −0.929 | −0.929 | −0.522 | −0.783 | 1.000 | |||||||||||||||||
Non-EU | −0.564 | −0.593 | −0.554 | −0.591 | −0.521 | −0.681 | −0.532 | −0.564 | 0.396 | 0.687 | 0.687 | 0.687 | 0.895 | 0.881 | −0.843 | 1.000 | ||||||||||||||||
GDP: Quarter -on-Quarter growth: CVM SA % | 0.033 | 0.022 | 0.036 | 0.028 | 0.041 | −0.012 | 0.044 | 0.033 | −0.049 | 0.001 | 0.001 | 0.001 | −0.023 | 0.033 | −0.010 | −0.016 | 1.000 | |||||||||||||||
GDP (Average) per head, CVM market prices: SA | 0.124 | 0.110 | 0.128 | 0.111 | 0.143 | 0.053 | 0.139 | 0.124 | 0.189 | 0.143 | 0.143 | 0.143 | 0.464 | 0.311 | −0.197 | 0.399 | 0.440 | 1.000 | ||||||||||||||
IR BASE RATE | −0.205 | −0.228 | −0.199 | −0.226 | −0.174 | −0.305 | −0.188 | −0.204 | 0.213 | 0.246 | 0.246 | 0.246 | 0.692 | 0.337 | −0.388 | 0.673 | −0.050 | 0.385 | 1.000 | |||||||||||||
CPIOOHC in All Items | −0.362 | −0.397 | −0.351 | −0.390 | −0.317 | −0.484 | −0.330 | −0.362 | 0.397 | 0.618 | 0.618 | 0.618 | 0.839 | 0.761 | −0.783 | 0.945 | 0.006 | 0.464 | 0.704 | 1.000 | ||||||||||||
London Median Pay from PAYE | −0.687 | −0.743 | −0.668 | −0.708 | −0.651 | −0.721 | −0.662 | −0.687 | 0.674 | 0.942 | 0.942 | 0.942 | 0.556 | 0.770 | −0.969 | 0.851 | 0.075 | 0.244 | 0.413 | 0.770 | 1.000 | |||||||||||
All aged 16 to 64 | −0.598 | −0.665 | −0.574 | −0.613 | −0.571 | −0.548 | −0.587 | −0.598 | 0.867 | 0.986 | 0.986 | 0.986 | 0.261 | 0.569 | −0.907 | 0.635 | 0.010 | 0.138 | 0.233 | 0.558 | 0.921 | 1.000 | ||||||||||
Total in employment | −0.479 | −0.546 | −0.455 | −0.492 | −0.454 | −0.411 | −0.472 | −0.479 | 0.899 | 0.949 | 0.949 | 0.949 | 0.182 | 0.501 | −0.855 | 0.560 | −0.073 | 0.148 | 0.185 | 0.514 | 0.846 | 0.972 | 1.000 | |||||||||
Employment rate (%) | −0.301 | −0.363 | −0.278 | −0.311 | −0.279 | −0.216 | −0.298 | −0.301 | 0.876 | 0.840 | 0.840 | 0.840 | 0.075 | 0.383 | −0.733 | 0.430 | −0.160 | 0.152 | 0.114 | 0.424 | 0.697 | 0.871 | 0.962 | 1.000 | ||||||||
Unemployed (’000s) | −0.192 | −0.185 | −0.195 | −0.186 | −0.201 | −0.186 | −0.192 | −0.192 | −0.283 | −0.101 | −0.101 | −0.101 | −0.291 | −0.168 | 0.167 | −0.281 | 0.238 | −0.460 | −0.359 | −0.401 | −0.074 | −0.094 | −0.220 | −0.350 | 1.000 | |||||||
Unemployment rate (%) | 0.038 | 0.073 | 0.026 | 0.051 | 0.017 | 0.005 | 0.037 | 0.038 | −0.643 | −0.482 | −0.482 | −0.482 | −0.369 | −0.346 | 0.491 | −0.501 | 0.261 | −0.496 | −0.465 | −0.579 | −0.423 | −0.503 | −0.615 | −0.700 | 0.784 | 1.000 | ||||||
All Starts | −0.005 | −0.021 | 0.001 | −0.006 | −0.002 | −0.006 | 0.003 | −0.005 | 0.183 | 0.240 | 0.240 | 0.240 | 0.138 | 0.216 | −0.179 | 0.170 | 0.467 | 0.480 | −0.151 | 0.203 | 0.213 | 0.192 | 0.143 | 0.081 | −0.061 | −0.076 | 1.000 | |||||
All Completions | −0.092 | −0.144 | −0.075 | −0.103 | −0.072 | −0.114 | −0.075 | −0.092 | 0.465 | 0.440 | 0.440 | 0.440 | 0.088 | 0.212 | −0.394 | 0.264 | 0.514 | 0.595 | 0.106 | 0.269 | 0.469 | 0.484 | 0.438 | 0.359 | −0.079 | −0.221 | 0.411 | 1.000 | ||||
COPI | −0.628 | −0.696 | −0.604 | −0.641 | −0.602 | −0.593 | −0.615 | −0.628 | 0.785 | 0.943 | 0.943 | 0.943 | 0.184 | 0.507 | −0.857 | 0.561 | 0.014 | −0.035 | 0.180 | 0.460 | 0.884 | 0.957 | 0.913 | 0.797 | 0.095 | −0.313 | 0.101 | 0.404 | 1.000 | |||
Trade Exports | −0.349 | −0.409 | −0.329 | −0.372 | −0.311 | −0.380 | −0.328 | −0.349 | 0.711 | 0.786 | 0.786 | 0.786 | 0.588 | 0.599 | −0.829 | 0.819 | 0.062 | 0.573 | 0.619 | 0.866 | 0.836 | 0.773 | 0.763 | 0.697 | −0.459 | −0.737 | 0.283 | 0.540 | 0.636 | 1.000 | ||
Trade imports | −0.290 | −0.340 | −0.274 | −0.316 | −0.248 | −0.364 | −0.264 | −0.290 | 0.595 | 0.673 | 0.673 | 0.673 | 0.715 | 0.660 | −0.763 | 0.860 | 0.110 | 0.662 | 0.666 | 0.909 | 0.771 | 0.648 | 0.619 | 0.542 | −0.475 | −0.712 | 0.328 | 0.524 | 0.503 | 0.958 | 1.000 | |
Trade Balance | 0.002 | 0.002 | 0.003 | 0.025 | −0.032 | 0.157 | −0.026 | 0.002 | −0.017 | −0.068 | −0.068 | −0.068 | −0.723 | −0.520 | 0.240 | −0.576 | −0.187 | −0.595 | −0.485 | −0.609 | −0.248 | −0.022 | 0.044 | 0.116 | 0.299 | 0.321 | −0.296 | −0.243 | 0.080 | −0.410 | −0.654 | 1.000 |
Highly Correlated Independent Variables | ||
IR Base Rate | VS | Consumer price index occupiers’ housing costs strong high correlation (r = 0.703) |
Total in employment | VS | London Population (r = 0.898) |
London Median Pay (r = 0.845) | ||
COPI | VS | London Population (r = 0.784) |
London Median Pay (r = 0.883) | ||
Total in Employment (r = 0.912) | ||
Trade balance | VS | Net Migration (r = −0.723) |
Key Events | Period | HPI Cash Purchases | HPI Mortgage Purchases | HPI New Build | HPI All Property Types | HPI First-Time Buyers | HPI Former Owner-Occupiers |
---|---|---|---|---|---|---|---|
2014-07 | 99.04 | 98.96 | 96.07 | 98.98 | 98.87 | 99.09 | |
2014-08 | 100.19 | 100.57 | 97.62 | 100.47 | 100.41 | 100.53 | |
2014-09 | 100.12 | 100.23 | 97.43 | 100.2 | 100.29 | 100.12 | |
2014-10 | 99.71 | 99.91 | 97.66 | 99.86 | 99.82 | 99.9 | |
2014-11 | 99.37 | 99.53 | 96.35 | 99.49 | 99.45 | 99.53 | |
2014-12 | 99.75 | 100.1 | 99.46 | 100.01 | 100.15 | 99.89 | |
2015-01 | 100 | 100 | 100 | 100 | 100 | 100 | |
2015-02 | 100.48 | 100.48 | 101.28 | 100.48 | 100.41 | 100.54 | |
2015-03 | 100.19 | 100.55 | 100.74 | 100.46 | 100.49 | 100.43 | |
2015-04 | 101.51 | 102.01 | 101.98 | 101.89 | 101.87 | 101.9 | |
2015-05 | 102.83 | 103.34 | 102.91 | 103.22 | 103.41 | 103.05 | |
2015-06 | 103.47 | 104.34 | 101.03 | 104.13 | 104.11 | 104.14 | |
2015-07 | 106.6 | 107.32 | 105.07 | 107.15 | 107.3 | 107.01 | |
2015-08 | 107.26 | 108.59 | 105.07 | 108.27 | 108.32 | 108.22 | |
2015-09 | 108.71 | 109.3 | 106.13 | 109.16 | 109.12 | 109.19 | |
2015-10 | 108.08 | 109.75 | 107.15 | 109.34 | 109.27 | 109.41 | |
2015-11 | 109.82 | 110.83 | 108.03 | 110.58 | 110.53 | 110.63 | |
2015-12 | 110.7 | 112.05 | 111.97 | 111.72 | 111.77 | 111.67 | |
2016-01 | 112.5 | 113.9 | 112.7 | 113.56 | 113.51 | 113.6 | |
2016-02 | 111.96 | 114.17 | 109.88 | 113.63 | 113.71 | 113.56 | |
2016-03 | 114.09 | 115.74 | 109.52 | 115.34 | 115.48 | 115.21 | |
2016-04 | 113.17 | 114.86 | 116.16 | 114.45 | 114.7 | 114.23 | |
2016-05 | 114.6 | 116.51 | 119.9 | 116.05 | 116.5 | 115.64 | |
Brexit referendum (23 June 2016) | 2016-06 | 114.74 | 116.67 | 115.8 | 116.2 | 116.49 | 115.94 |
2016-07 | 116.14 | 118.65 | 116.49 | 118.04 | 118.22 | 117.88 | |
2016-08 | 114.96 | 117.86 | 115.71 | 117.16 | 117.54 | 116.81 | |
2016-09 | 115.51 | 117.62 | 116.16 | 117.11 | 117.32 | 116.92 | |
2016-10 | 115.25 | 117.46 | 118.56 | 116.92 | 117.3 | 116.58 | |
2016-11 | 115.74 | 117.25 | 117.59 | 116.88 | 117.11 | 116.67 | |
2016-12 | 116.3 | 117.56 | 117.76 | 117.26 | 117.58 | 116.97 | |
2017-01 | 116.85 | 118.45 | 121.03 | 118.06 | 118.25 | 117.89 | |
2017-02 | 117.59 | 118.59 | 122.58 | 118.34 | 118.86 | 117.79 | |
2017-03 | 116.81 | 118.41 | 119.86 | 118.02 | 118.37 | 117.67 | |
2017-04 | 118.57 | 119.29 | 120.82 | 119.1 | 119.39 | 118.82 | |
2017-05 | 118.27 | 119.73 | 120.6 | 119.38 | 120.05 | 118.66 | |
2017-06 | 117.41 | 119.74 | 118.74 | 119.19 | 119.8 | 118.55 | |
2017-07 | 119.81 | 121.73 | 121.62 | 121.27 | 121.77 | 120.75 | |
2017-08 | 119.19 | 121.45 | 120.21 | 120.91 | 121.21 | 120.62 | |
2017-09 | 118.15 | 120.71 | 120.93 | 120.1 | 120.44 | 119.77 | |
2017-10 | 118.14 | 120.05 | 122.07 | 119.59 | 119.65 | 119.57 | |
2017-11 | 117.12 | 118.59 | 117.41 | 118.23 | 118.51 | 117.96 | |
2017-12 | 117.13 | 118.76 | 118.39 | 118.37 | 118.68 | 118.06 | |
2018-01 | 118.35 | 119.35 | 121.83 | 119.1 | 119.34 | 118.87 | |
2018-02 | 117.33 | 119.05 | 125.94 | 118.62 | 119.14 | 118.03 | |
2018-03 | 115.82 | 117.73 | 120.03 | 117.25 | 117.52 | 116.99 | |
2018-04 | 116.92 | 118.98 | 122.26 | 118.47 | 118.68 | 118.29 | |
2018-05 | 116.44 | 119.55 | 120.42 | 118.78 | 118.92 | 118.67 | |
2018-06 | 117.28 | 119.75 | 120.58 | 119.13 | 119.19 | 119.15 | |
2018-07 | 118.63 | 120.89 | 121.56 | 120.32 | 120.2 | 120.59 | |
2018-08 | 117.48 | 119.56 | 121.76 | 119.04 | 119.06 | 119.1 | |
2018-09 | 116.58 | 118.86 | 119.12 | 118.29 | 118.15 | 118.57 | |
2018-10 | 117.19 | 119.82 | 121.94 | 119.17 | 119.26 | 119.13 | |
2018-11 | 116.09 | 118.3 | 116.97 | 117.75 | 117.58 | 118.06 | |
2018-12 | 115.65 | 118.08 | 119.66 | 117.48 | 117.67 | 117.31 | |
2019-01 | 114.58 | 117.38 | 118.76 | 116.69 | 116.59 | 116.9 | |
2019-02 | 113.66 | 116.37 | 120.77 | 115.69 | 115.88 | 115.53 | |
2019-03 | 113.09 | 115.92 | 118.4 | 115.22 | 115.43 | 115.02 | |
2019-04 | 115.14 | 117.07 | 119.56 | 116.55 | 116.66 | 116.5 | |
2019-05 | 113.19 | 115.73 | 116.54 | 115.09 | 114.99 | 115.31 | |
2019-06 | 114.75 | 117.48 | 116.57 | 116.8 | 116.63 | 117.11 | |
2019-07 | 116.5 | 119.53 | 122.92 | 118.78 | 118.92 | 118.69 | |
2019-08 | 114.34 | 118.28 | 117.83 | 117.35 | 117.13 | 117.72 | |
2019-09 | 116.11 | 119.2 | 122.15 | 118.44 | 118.55 | 118.39 | |
2019-10 | 114.5 | 118.22 | 119.95 | 117.33 | 117.26 | 117.51 | |
2019-11 | 113.64 | 117.22 | 113.57 | 116.36 | 115.84 | 117.16 | |
2019-12 | 116.86 | 119.63 | 117.19 | 118.94 | 118.86 | 119.14 | |
UK Leaves the EU | 2020-01 | 116.18 | 118.81 | 123.9 | 118.15 | 118.17 | 118.2 |
2020-02 | 115.53 | 118.51 | 118.38 | 117.78 | 117.51 | 118.24 | |
COVID-19 pandemic onset | 2020-03 | 117.9 | 120.45 | 122.56 | 119.8 | 119.67 | 120.06 |
2020-04 | 116.62 | 118.77 | 122.89 | 118.2 | 117.85 | 118.78 | |
2020-05 | 114.62 | 118.34 | 123.23 | 117.47 | 117.36 | 117.7 | |
2020-06 | 116.61 | 119.94 | 116.74 | 119.14 | 118.81 | 119.7 | |
2020-07 | 117.79 | 120.85 | 121.89 | 120.1 | 119.73 | 120.71 | |
2020-08 | 118.72 | 122.35 | 122.51 | 121.49 | 120.8 | 122.55 | |
2020-09 | 119.3 | 123.38 | 122.1 | 122.43 | 121.8 | 123.4 | |
2020-10 | 116.71 | 121.85 | 118.88 | 120.69 | 120.04 | 121.69 | |
2020-11 | 119.39 | 123.78 | 119.15 | 122.76 | 121.93 | 124.02 | |
End of Brexit Transition Period | 2020-12 | 118.96 | 123.77 | 119.25 | 122.67 | 121.98 | 123.74 |
2021-01 | 119.1 | 123.8 | 119.7 | 122.7 | 122.4 | 123.2 | |
2021-02 | 118.3 | 122.8 | 122.1 | 121.8 | 121.8 | 121.8 | |
2021-03 | 120.7 | 124.9 | 124.4 | 123.9 | 124 | 123.9 | |
2021-04 | 117.6 | 122.5 | 122.4 | 121.4 | 121.3 | 121.6 | |
2021-05 | 117.7 | 122.2 | 120.2 | 121.2 | 120.9 | 121.7 | |
2021-06 | 120.3 | 126.1 | 121.1 | 124.8 | 124.8 | 124.9 | |
2021-07 | 123.2 | 123 | 124.6 | 122.8 | 122.3 | 123.7 | |
2021-08 | 125.4 | 127.1 | 122.4 | 126.6 | 125.6 | 128.1 | |
2021-09 | 122 | 126.7 | 120.9 | 125.6 | 125 | 126.6 | |
2021-10 | 122.9 | 125.9 | 118.2 | 125.1 | 123.9 | 127 | |
2021-11 | 125 | 127.7 | 123.7 | 127 | 126 | 128.5 | |
2021-12 | 124 | 128 | 120.2 | 127 | 126.1 | 128.5 | |
2022-01 | 125.2 | 128.7 | 121.9 | 127.8 | 126.7 | 129.5 | |
2022-02 | 125.1 | 128.8 | 123.9 | 127.9 | 127 | 129.3 | |
2022-03 | 124.7 | 128.3 | 123.2 | 127.5 | 126.3 | 129.1 | |
2022-04 | 126.3 | 129.6 | 122 | 128.7 | 127.6 | 130.5 | |
2022-05 | 124.8 | 129.6 | 121.4 | 128.5 | 127.1 | 130.5 | |
2022-06 | 129.1 | 133.6 | 125.9 | 132.6 | 131.3 | 134.4 | |
2022-07 | 130 | 134.4 | 125.7 | 133.4 | 131.9 | 135.5 | |
2022-08 | 130.8 | 135.8 | 126.3 | 134.6 | 132.9 | 137 | |
2022-09 | 130.6 | 135.5 | 126.7 | 134.4 | 132.6 | 136.7 | |
2022-10 | 127.6 | 133.7 | 123 | 132.4 | 130.8 | 134.6 | |
2022-11 | 129 | 134.2 | 124.9 | 133.1 | 131.4 | 135.3 | |
2022-12 | 127.9 | 133.3 | 122.4 | 132.1 | 130.5 | 134.3 |
Key Events | Period (QUARTERLY) | HPI Cash Purchases | HPI Mortgage Purchases | HPI New Build | HPI All Property Types | HPI First-Time Buyers | HPI Former Owner-Occupiers |
---|---|---|---|---|---|---|---|
Q3 2014 | 99.7833333 | 99.92 | 97.04 | 99.8833333 | 99.8566667 | 99.9133333 | |
Q4 2014 | 99.61 | 99.8466667 | 97.8233333 | 99.7866667 | 99.8066667 | 99.7733333 | |
Q1 2015 | 100.223333 | 100.343333 | 100.673333 | 100.313333 | 100.3 | 100.323333 | |
Q2 2015 | 102.603333 | 103.23 | 101.973333 | 103.08 | 103.13 | 103.03 | |
Q3 2015 | 107.523333 | 108.403333 | 105.423333 | 108.193333 | 108.246667 | 108.14 | |
Q4 2015 | 109.533333 | 110.876667 | 109.05 | 110.546667 | 110.523333 | 110.57 | |
Q1 2016 | 112.85 | 114.603333 | 110.7 | 114.176667 | 114.233333 | 114.123333 | |
Q2 2016 | 114.17 | 116.013333 | 117.286667 | 115.566667 | 115.896667 | 115.27 | |
Brexit referendum | |||||||
Q3 2016 | 115.536667 | 118.043333 | 116.12 | 117.436667 | 117.693333 | 117.203333 | |
Q4 2016 | 115.763333 | 117.423333 | 117.97 | 117.02 | 117.33 | 116.74 | |
Q1 2017 | 117.083333 | 118.483333 | 121.156667 | 118.14 | 118.493333 | 117.783333 | |
Q2 2017 | 118.083333 | 119.586667 | 120.053333 | 119.223333 | 119.746667 | 118.676667 | |
Q3 2017 | 119.05 | 121.296667 | 120.92 | 120.76 | 121.14 | 120.38 | |
Q4 2017 | 117.463333 | 119.133333 | 119.29 | 118.73 | 118.946667 | 118.53 | |
Q1 2018 | 117.166667 | 118.71 | 122.6 | 118.323333 | 118.666667 | 117.963333 | |
Q2 2018 | 116.88 | 119.426667 | 121.086667 | 118.793333 | 118.93 | 118.703333 | |
Q3 2018 | 117.563333 | 119.77 | 120.813333 | 119.216667 | 119.136667 | 119.42 | |
Q4 2018 | 116.31 | 118.733333 | 119.523333 | 118.133333 | 118.17 | 118.166667 | |
Q1 2019 | 113.776667 | 116.556667 | 119.31 | 115.866667 | 115.966667 | 115.816667 | |
Q2 2019 | 114.36 | 116.76 | 117.556667 | 116.146667 | 116.093333 | 116.306667 | |
Q3 2019 | 115.65 | 119.003333 | 120.966667 | 118.19 | 118.2 | 118.266667 | |
Q4 2019 | 115 | 118.356667 | 116.903333 | 117.543333 | 117.32 | 117.936667 | |
UK Leaves the EU | Q1 2020 | 116.536667 | 119.256667 | 121.613333 | 118.576667 | 118.45 | 118.833333 |
COVID-19 pandemic onset | |||||||
Q2 2020 | 115.95 | 119.016667 | 120.953333 | 118.27 | 118.006667 | 118.726667 | |
Q3 2020 | 118.603333 | 122.193333 | 122.166667 | 121.34 | 120.776667 | 122.22 | |
Q4 2020 | 118.353333 | 123.133333 | 119.093333 | 122.04 | 121.316667 | 123.15 | |
End of Brexit Transition Period | |||||||
Q1 2021 | 119.366667 | 123.833333 | 122.066667 | 122.8 | 122.733333 | 122.966667 | |
Q2 2021 | 118.533333 | 123.6 | 121.233333 | 122.466667 | 122.333333 | 122.733333 | |
Q3 2021 | 123.533333 | 125.6 | 122.633333 | 125 | 124.3 | 126.133333 | |
Q4 2021 | 123.966667 | 127.2 | 120.7 | 126.366667 | 125.333333 | 128 | |
Q1 2022 | 125 | 128.6 | 123 | 127.733333 | 126.666667 | 129.3 | |
Q2 2022 | 126.733333 | 130.933333 | 123.1 | 129.933333 | 128.666667 | 131.8 | |
Q3 2022 | 130.466667 | 135.233333 | 126.233333 | 134.133333 | 132.466667 | 136.4 | |
Q4 2022 | 128.166667 | 133.733333 | 123.433333 | 132.533333 | 130.9 | 134.733333 | |
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Size of “r” | Interpretation |
---|---|
0.90 to 1.00 | Very high correlation |
0.70 to 1.89 | High correlation |
0.50 to 0.69 | Moderate correlation |
0.30 to 0.49 | Low correlation |
0.00 to 0.29 | Little if any correlation |
Model 1: HPI Cash Purchases | Model 2: HPI Mortgage Purchases | Model 3: HPI New Build | Model 4: HPI in All Property Types | Model 5: HPI First-Time Buyers | Model 6: HPI Former Owner-Occupiers | Model 7: HPI Mortgage Purchases | ||
---|---|---|---|---|---|---|---|---|
Regression Statistics | Multiple R | 0.967702515 | 0.95506282 | 0.958167847 | 0.958145046 | 0.959424326 | 0.955500929 | 0.28918806 |
R Square | 0.936448157 | 0.91214499 | 0.918085624 | 0.91804193 | 0.920495038 | 0.912982025 | 0.083629734 | |
Adjusted R Square | 0.900132819 | 0.861942127 | 0.871277409 | 0.871208747 | 0.875063631 | 0.863257467 | 0.024509071 | |
Standard Error | 0.003178484 | 0.003416828 | 0.004176872 | 0.003362874 | 0.003482584 | 0.003241064 | 0.009082475 | |
Observations | 34 | 34 | 34 | 34 | 34 | 34 | 34 | |
ANOVA | RSS (Residual SS) | 0.000212158 | 0.000245169 | 0.000366372 | 0.000237487 | 0.000254696 | 0.000220594 | 0.002557232 |
n (No. of Observations) | 34 | 34 | 34 | 34 | 34 | 34 | 34 | |
k (No. of parameters) | 13 | 13 | 13 | 13 | 13 | 13 | 3 | |
AIC (Akaike) | −381.4743533 | −376.5573927 | −362.8995436 | −377.6397787 | −375.2612138 | −380.1486039 | −316.8364776 | |
BIC | −12,924.28532 | −12,757.10866 | −12,292.7418 | −12,793.90979 | −12,713.03858 | −12,879.20985 | −10,761.86116 | |
F-Statistic | 25.78657368 | 18.16918273 | 19.61377131 | 19.60238171 | 20.26120471 | 18.36078739 | 1.414560164 | |
p-value | 7.31 × 10−10 | 1.9−4 × 10−8 | 9.6 × 10−9 | 9.64932 × 10−9 | 7.09839 × 10−9 | 1.76538 × 10−8 | 0.258285681 | |
Coefficients | Intercept | |||||||
Coefficient | −2.600954066 | −2.566576162 | −2.472436333 | −2.571138851 | −2.619735914 | −2.514935524 | 0.679667238 | |
Standard Error | 0.325386547 | 0.349786261 | 0.427593195 | 0.344262835 | 0.356517725 | 0.331792957 | 0.002659017 | |
t-Statistic | −7.993428397 | −7.33755566 | −5.782216278 | −7.468534484 | −7.348122491 | −7.579833958 | 255.6084148 | |
p-value | 8.34448 × 10−8 | 3.19883 × 10−7 | 9.70434 × 10−6 | 2.43468 × 10−7 | 3.12889 × 10−7 | 1.93416 × 10−7 | 4.27502 × 10−53 | |
Log with base 10,000,000 London population | Coefficient | 4.338218502 | 5.16631317 | 3.901809254 | 5.007341692 | 5.038470513 | 4.980515121 | |
Standard Error | 1.616135995 | 1.737324953 | 2.123777888 | 1.709891093 | 1.770758913 | 1.647955473 | ||
t-Statistic | 2.684315253 | 2.973717243 | 1.837202127 | 2.928456504 | 2.845373515 | 3.022238891 | ||
p-value | 0.013883976 | 0.007243641 | 0.080373974 | 0.00802945 | 0.009689464 | 0.006483471 | ||
Log with base 1,000,000 Net Migration | Coefficient | 0.062681314 | 0.062367768 | 0.031374487 | 0.061869673 | 0.061475409 | 0.062959768 | |
Standard Error | 0.028487861 | 0.030624076 | 0.037436137 | 0.030140495 | 0.031213421 | 0.029048747 | ||
t-Statistic | 2.200281525 | 2.036560006 | 0.838080241 | 2.052709226 | 1.969518445 | 2.167383253 | ||
p-value | 0.039117417 | 0.054498953 | 0.411423444 | 0.052770593 | 0.062226963 | 0.041848397 | ||
GDP | Coefficient | 0.000108233 | 0.000116174 | 6.94176 × 10−5 | 0.000113608 | 0.000106428 | 0.000125175 | |
Standard Error | 0.000216776 | 0.000233032 | 0.000284867 | 0.000229352 | 0.000237516 | 0.000221044 | ||
t-Statistic | 0.499282725 | 0.498533623 | 0.243684023 | 0.495344172 | 0.448086374 | 0.56629078 | ||
p-value | 0.622770671 | 0.623289497 | 0.809840328 | 0.625500746 | 0.658679556 | 0.577198546 | ||
IR base rate | Coefficient | −0.009740763 | −0.010344908 | −0.01071233 | −0.010173949 | −0.010501916 | −0.009948918 | 0.001955025 |
Standard Error | 0.003227997 | 0.003470054 | 0.004241938 | 0.003415259 | 0.003536834 | 0.003291552 | 0.005212322 | |
t-Statistic | −3.017587741 | −2.981195073 | −2.525338979 | −2.978968587 | −2.969298806 | −3.02256173 | 0.375077494 | |
p-value | 0.006552871 | 0.007121141 | 0.019669438 | 0.007157405 | 0.007316973 | 0.00647868 | 0.710156868 | |
CPIOOHC in All items | Coefficient | 0.004749632 | 0.004383166 | 0.003174663 | 0.004472918 | 0.004408887 | 0.004559121 | −0.001808049 |
Standard Error | 0.001160547 | 0.001247572 | 0.001525084 | 0.001227872 | 0.001271581 | 0.001183396 | 0.001183686 | |
t-Statistic | 4.092581685 | 3.513355892 | 2.081631749 | 3.642820794 | 3.467247707 | 3.852573716 | −1.527474469 | |
p-value | 0.00052074 | 0.002066209 | 0.049797564 | 0.001521124 | 0.002303457 | 0.000923717 | 0.13678309 | |
Log with base 10,000 of London Median Pay from PAYE | Coefficient | −0.145938843 | 0.017817145 | −1.258856285 | −0.01575365 | −0.137881457 | 0.155758213 | |
Standard Error | 0.649863534 | 0.698594757 | 0.853991129 | 0.687563343 | 0.712038868 | 0.662658446 | ||
t-Statistic | −0.224568444 | 0.025504264 | −1.474085903 | −0.022912289 | −0.193643161 | 0.235050521 | ||
p-value | 0.824485663 | 0.979893554 | 0.155292266 | 0.981936558 | 0.848316085 | 0.816446365 | ||
Log with base 10,000,000 of Total in employment | Coefficient | −0.994933785 | −2.123612792 | −0.386135756 | −1.904294316 | −1.825081571 | −2.026293278 | |
Standard Error | 1.828451101 | 1.965560901 | 2.402782953 | 1.934522998 | 2.003387149 | 1.864450769 | ||
t-Statistic | −0.544140221 | −1.08041058 | −0.160703552 | −0.98437409 | −0.910997942 | −1.086804389 | ||
p-value | 0.592076184 | 0.292211775 | 0.873862789 | 0.336137911 | 0.372635547 | 0.289440911 | ||
Log with base 1,000,000 of Unemployed (’000s) | Coefficient | −0.011124499 | −0.024665574 | 0.054365975 | −0.021285141 | −0.017855857 | −0.027063273 | |
Standard Error | 0.077591882 | 0.083410253 | 0.101964144 | 0.082093133 | 0.085015442 | 0.079119558 | ||
t-Statistic | −0.143371949 | −0.295713928 | 0.533187184 | −0.259280411 | −0.210030743 | −0.342055409 | ||
p-value | 0.887363276 | 0.770352825 | 0.599502086 | 0.797943638 | 0.835668039 | 0.735708739 | ||
COPI | Coefficient | 0.008549181 | 0.010003936 | 0.008414233 | 0.009672236 | 0.009645061 | 0.00975438 | |
Standard Error | 0.001841924 | 0.001980044 | 0.002420488 | 0.001948778 | 0.002018149 | 0.001878189 | ||
t-Statistic | 4.641440359 | 5.052379884 | 3.476254636 | 4.963232516 | 4.779161414 | 5.193502525 | ||
p-value | 0.000140326 | 5.29697 × 10−5 | 0.002255103 | 6.5377 × 10−5 | 0.000101126 | 3.80079 × 10−5 | ||
Trade Balance | Coefficient | −0.027349689 | 0.106369466 | 0.718507614 | 0.076553141 | 0.119106688 | 0.024831248 | |
Standard Error | 0.306902041 | 0.32991566 | 0.40330255 | 0.324706007 | 0.336264724 | 0.312944517 | ||
t-Statistic | −0.08911537 | 0.322414116 | 1.781559808 | 0.235761395 | 0.354205122 | 0.079347127 | ||
p-value | 0.929834657 | 0.750326849 | 0.08929009 | 0.815901894 | 0.726716984 | 0.93750779 | ||
All Starts | Coefficient | 0.029521422 | 0.023898569 | 0.020265601 | 0.024841983 | 0.025888478 | 0.023021625 | |
Standard Error | 0.058081652 | 0.062437012 | 0.076325587 | 0.061451078 | 0.063638582 | 0.059225199 | ||
t-Statistic | 0.508274491 | 0.382762848 | 0.265515171 | 0.404256265 | 0.406804765 | 0.388713342 | ||
p-value | 0.616558732 | 0.705742392 | 0.793201727 | 0.690111888 | 0.688267762 | 0.701401341 | ||
All Completions | Coefficient | −0.015633461 | −0.033749658 | −0.032085397 | −0.029597887 | −0.025695669 | −0.035679074 | |
Standard Error | 0.08125193 | 0.087344756 | 0.106773843 | 0.085965507 | 0.089025663 | 0.082851668 | ||
t-Statistic | −0.192407261 | −0.386395925 | −0.300498657 | −0.344299568 | −0.288632152 | −0.430637971 | ||
p-value | 0.849271708 | 0.703090728 | 0.766751559 | 0.734044909 | 0.775692724 | 0.671119249 |
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Stavridou, M.; Dimopoulos, T.; Katafygiotou, M. Macroeconomic and Demographic Determinants of London Housing Prices: A Pre- and Post-Brexit Analysis. Real Estate 2025, 2, 10. https://doi.org/10.3390/realestate2030010
Stavridou M, Dimopoulos T, Katafygiotou M. Macroeconomic and Demographic Determinants of London Housing Prices: A Pre- and Post-Brexit Analysis. Real Estate. 2025; 2(3):10. https://doi.org/10.3390/realestate2030010
Chicago/Turabian StyleStavridou, Maria, Thomas Dimopoulos, and Martha Katafygiotou. 2025. "Macroeconomic and Demographic Determinants of London Housing Prices: A Pre- and Post-Brexit Analysis" Real Estate 2, no. 3: 10. https://doi.org/10.3390/realestate2030010
APA StyleStavridou, M., Dimopoulos, T., & Katafygiotou, M. (2025). Macroeconomic and Demographic Determinants of London Housing Prices: A Pre- and Post-Brexit Analysis. Real Estate, 2(3), 10. https://doi.org/10.3390/realestate2030010