A Multiple Error-Correction Model of Housing Supply Accepted for publication in Housing Studies

This paper considers supply dynamics in the context of the Irish residential market. The analysis, in a multiple error-correction framework, reveals that whilst developers did respond to disequilibrium in supply, the rate of adjustment was relatively slow. In contrast, however, disequilibrium in demand did not impact upon supply, suggesting that inelastic supply conditions could explain the prolonged nature of the boom in the Irish market. Increased elasticity in the later stages of the boom may have been a contributory factor in the extent of the house price falls observed in recent years. * The valuable comments of the Managing Editor and two anonymous referees are much appreciated. The authors would also like to thank the participants at the Asian Real Estate Society Annual Conference where an early draft of this paper was presented at. † Author to whom correspondence should be addressed: School of Real Estate & Planning, Henley Business School, University of Reading, Whiteknights, Reading, RG6 6UD, UK. Tel: +44-118-378-4008, email: [email protected] ‡ Department of Property, University of Auckland, email: [email protected]