House prices miss what people really want from where they live, study finds
House prices miss what people really want from where they live, study finds
Wednesday 12 Aug 2026A new study suggests that property prices are an incomplete guide to people’s true location preferences - and that housing search data offer a much clearer picture of what households actually want.
House prices are routinely used by economists, climate scientists, urban planners and policymakers to estimate how people value neighbourhoods, environmental quality, transport access, schools and flood risk. The usual assumption is that the market is revealing demand.
New research The Hidden Geography of Housing Demand Exposes Policy Failure: Evidence from Billions of Housing SearchesLink opens in a new window by Nikhil Datta, Amrita Kulka and Jawad Wehbe highlights that this assumption can give a misleading impression.
By analysing 16 billion housing searches on Rightmove between 2019 and 2024, the researchers argue that online search behaviour provides a more direct and timely measure of housing demand than completed property transactions.
Nikhil Datta, Assistant Professor of Economics at Warwick University and CAGE Impact Director says:
“House prices are widely used in research and policy to assess everything from the value of green space to the costs of flood risk and the likely success of new housing developments. But our work suggests that prices reflect much more than demand alone. They are shaped by supply constraints, the small subset of homes that actually transact, and the behaviour of sellers.”
The study highlights three examples:
The pandemic's "race for space" was temporary
During lockdowns, when access to shared outdoor space was restricted, demand for homes with private green space rose sharply. At its peak in late 2020, an additional 100 square metres of private greenspace increased housing searches by about 0.8%, but the rise in demand returned to pre-pandemic levels by the end of 2023.
The researchers suggest that prices gave a distorted picture because they were influenced by factors beyond demand, including changes in who was buying and selling, the temporary stamp duty holiday and a subsequent increase in housing supply in greener areas.
Floods cause sharp but short-lived demand shocks
The study also sheds new light on how households respond to flood risk. It finds that searches in areas affected by major flooding fell by up to 5% in the ten weeks following a flood before gradually returning to normal. These impacts however are missed, when looking at house prices.
New housing does not create new demand
Analysing 3200 new-build developments between 2019 and 2024, the researchers found only a modest increase in local search activity after construction began. Demand rose by only one or two extra people per month for every 100 new homes added.
Amrita Kulka, Assistant Professor of Economics at Warwick University and CAGE Policy Theme Lead says:
“There is often the assumption that large scale housing developments and new towns generate demand that currently have little interest.
“Our research suggests that housing supply alone does little to alter the attractiveness of a location, and that hopes of using large housing developments to transform weak-demand areas may be overstated.
“Policies centred on creating new towns may need additional economic, employment and infrastructure strategies if they are to attract substantial new demand.”
The study also draws on the new nationwide measure of excess housing demand to identify the housing gap across local authority areas. By comparing the number of people searching against property listings, the analysis reveals substantial variation even within local authority boundaries, with 69% of variation outside London occurring within rather than between local authorities.
Nikhil Datta concludes:
“Transaction prices are often treated as a direct measure of demand when they are the outcome of a complex negotiation between buyers, sellers and housing supply constraints.
“As governments grapple with housing shortages, climate adaptation and regional development strategies, our research suggests that the future of housing analysis may lie not in what people buy, but in what they search for.”
- Read the full research paper: The Hidden Geography of Housing Demand Exposes Policy Failure: Evidence from Billions of Housing Searches