Speculation and Inflation in the Market for House-Building Land in England and Wales

Abstract

This paper reports the results of an investigation into the behaviour of the market for private house-building land in England and Wales in the 1960s and 1970s. After Zeeman (1974), a distinction is drawn between the speculative and fundamental market operators, and econometric tests were carried out to identify their impact on land price changes. The property boom 1971–1973 and its collapse are discussed in the context of Zeeman's cusp catastrophe theory. Results of econometric experiments show that the interpretation of these events in terms of catastrophic switches is not entirely satisfactory, but that changes in money supply and credit availability may be more likely causes of the boom.