In Search of the Matching Function in the Housing Market

61 Pages Posted: 2 Nov 2023

See all articles by Cristian Badarinza

Cristian Badarinza

National University of Singapore (NUS)

Vimal Balasubramaniam

Queen Mary University of London; Centre for Economic Policy Research (CEPR)

Tarun Ramadorai

Imperial College London; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Date Written: October 6, 2023

Abstract

We use granular and comprehensive data from the U.K. housing market to uncover the best functional form for different stages of the matching process (online search, physical meetings, final transactions). A Cobb-Douglas matching function finds broad support for both sale and rental markets, but elasticities and returns to scale differ considerably at different matching stages. Information beyond market tightness, including pricing strategy and price revisions, helps to predict matches, and we estimate significant cross-elasticities between rental and sale markets. We verify and extend these findings by studying search and matching during the 2022 ``mini-budget'' natural experiment.

Keywords: housing markets, rental markets, search and matching, returns to scale, pricing strategy

JEL Classification: D83, G50, R20, R21, R30

Suggested Citation

Badarinza, Cristian and Balasubramaniam, Vimal and Ramadorai, Tarun, In Search of the Matching Function in the Housing Market (October 6, 2023). Available at SSRN: https://ssrn.com/abstract=4594519 or http://dx.doi.org/10.2139/ssrn.4594519

Cristian Badarinza

National University of Singapore (NUS) ( email )

1E Kent Ridge Road
NUHS Tower Block Level 7
Singapore, 119228
Singapore

Vimal Balasubramaniam

Queen Mary University of London ( email )

Mile End Road
London, London E1 4NS
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Tarun Ramadorai (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

HOME PAGE: http://www.tarunramadorai.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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