The Spatial Impact of Employment Centres on Housing Markets by: Nikodem Szumilo, University of Cambridge; Edyta Laszkiewicz, University of Losz, Faculty of Economics and Sociology, Franz Fuerst, CULS Fellow, University of Cambridge

Local economic growth tends to affect neighbourhood house prices unevenly. It has been
observed that prime locations experience price hikes far in excess of the surrounding local area. Yet,
this phenomenon is not well captured by existing economic models. This research provides a model
of spatial and temporal interactions between housing and employment markets. The results show that
rapid growth of employment centres increases house prices in neighbouring locations even after
adjusting for fundamentals. It appears that the spatial clustering of companies creates an option value
for existing and potential employees that goes beyond ease of access for commuting purposes.
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