Introduction

A proper modelling of the housing sector in a structural macroeconomic and/or macroeconometric model needs to consider housing investment, the purchase of houses or housing services and the evolution of the prices charged for them. The main focus in the applied literature on this issue has often been the subsector of office space, but of course the sector of privately owned houses or private rental is also a very large and important sector of the macroeconomy.

What is particularly interesting from the macrodynamic point of view in this type of literature is that there are concepts and issues in the literature on the housing sector that are closely related to important topics of standard macrodynamic theorising. There is the concept of the natural vacancy rate, or of a Non-Accelerating Inflation Rate of Unemployment (NAIRU) in the housing sector, as discussed by Hendershott et al. (2002), the concept of overbuilt markets, see Hendershott (1996), and of persistent cycles in the housing sector that in our view bear close resemblance to what is happening in the unemployment-inflation dynamics in the interaction of the labour market with the market for goods and the wage-price spiral.