Abstract

It has been averred that there is an international market in housing (inter alia Adams & Füss, 2010; Helbling & Terrones, 2003; Pomogajko & Voigtländer, 2012). Although some authors examine the business cycle range, the mechanism by which this comes about is more likely to reflect financial market integration and evidence for this should be found in the medium-term cycle range. As a case study, there is an analysis of three associated ‘regional’ housing markets and their price movements. Northern Ireland’s economy is distinct but should be linked to the rest of the UK by common policy shocks, and to Eire through a mutual border. Using a Friedman test, it is found that even this small cluster is not integrated.
It is asserted that a housing cycle has both a financial and a business component. As Drehmann et al. (2012) argue, cycles in the medium-term range are significant in housing. A dual component approach highlights the relevance of cyclical interaction for both revealing integration and the need to intervene to moderate cyclical reinforcement for crisis-avoidance.
Post-1995, Dublin and London are found to be more integrated than before, which is consistent with international city integration thesis of Holly et al. (2011). Lastly, a simple test for cyclical asymmetry indicates that there is highness in the UK financial cycle.