An Agent-based Model of UK Housing Market
In this project we have built an Agent-Based Model (ABM) of the UK housing market in collaboration with the Bank of England. 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.
The model has already been put to use by the Bank of England in order to simulate what-if scenarios and to predict the most likely effect of possible macro-prudential policies. Some of these results, together with a description of the model, have already been published as a working paper of the Bank of England. 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.
People: Adrián Carro, Doyne Farmer