An agent-based model of UK housing market
This project, developed in collaboration with the Bank of England, is trying to build an Agent-Based Model (ABM) of the UK housing market. The work took as a starting point an earlier ABM of the Washington DC housing market, which used a wealth of data for calibration, and managed to accurately match many aspects of the housing market over a long forecasting period.
Our housing ABM is a comprehensive model of the UK housing market: it simulates a large pool of households with realistic life-cycles, inheritance of properties, and buy-to-let investors, and it models the rental market in detail. Many data sources have been used to calibrate the model, including market data from private organisations like Zoopla, government household surveys, and Bank of England confidential data.
This model has augmented the toolkit available for policy making at the Bank of England (for example, to simulate “what-if” scenarios and to assess the most likely effects of possible macro-prudential policies). Some of these preliminary results, together with a description of the model, have already been published as a Bank of England Staff Working Paper. This paper also explored a hypothetical loan-to-income policy, as well as the effects of an increased buy-to-let sector. In the future we will expand the model to include a variety of new data sources, more realistic mortgage dynamics, and more robust decision rules for the agents. Furthermore, we will refactor the model in terms of the Economic Simulation Library described here.
People: Adrián Carro, Doyne Farmer