A Step Beyond Microsimulation: Agent-Based Modelling of the English Housing Market

Housing markets are very important in modern societies because of their effect on households’ ability to find suitable accommodation at an affordable price and because of they lock in huge amounts of wealth, often in a way that is highly unequal. As a result, in many countries, and specifically in England, housing policy is a highly contentious and difficult issue. In this presentation, I will consider how one might model the English Housing market, from simple statistical approaches, through microsimulation and agent-based modelling, and illustrate the latter with a description of an agent-based model that has been developed over the last two decades and now incorporates owner-occupation, the rental sector, social housing and buy-to-lets. The model allows the testing of the implications on market prices and rents of a range of actual and proposed policies, such as changing the basis of property ‘council’ taxes, a ‘mansion’ tax on expensive properties, and transaction taxes, such as the English stamp duty land tax. I will comment on the advantages of using an agent-based modelling approach, but also on the problems and difficulties we had to overcome to obtain a working and validated model and suggest avenues for future development.