Regional-level analysis of housing price dynamics in the United Kingdom: a multivariate causality approach

Purpose This study aims to examine the dynamic causal relationships between regional housing markets and the national house price index in the UK between 2005 and 2024, a period spanning the global financial crisis, Brexit, the COVID-19 pandemic and subsequent inflationary pressures. It aims to identify whether particular regions act as persistent “signal transmitters” of housing price movements and to assess the implications for market integration, segmentation and housing policy. Design/methodology/approach The analysis uses monthly housing price indices disaggregated across the devolved nations and the nine English NUTS1 regions. Using Granger causality testing and robust regression estimators (M-estimator, S-estimator and MM-estimator), the study evaluates both the direction and stability of interregional price leadership. Structural break diagnostics are incorporated to account for volatility and regime shifts over the study horizon. Findings The results reveal that three English regions (the Northeast, Northwest and Southwest) consistently act as signal regions, Granger-causing movements in the national index. Conversely, London and the Southeast display diminishing bidirectional influence, signalling a post-pandemic decoupling from national price dynamics. These findings challenge traditional ripple-effect assumptions, suggesting that the UK housing market is becoming increasingly segmented, with leadership emanating from peripheral rather than core regions. Robustness checks confirm the stability of these causal patterns even in the presence of structural breaks and outlier effects. Originality/value This paper contributes a novel conceptual and empirical framework for detecting regional “signal regions” in housing markets, moving beyond the conventional London-centric ripple effect model. By integrating robust econometric techniques with a multi-scalar spatial framework, it advances understanding of market segmentation and integration in the UK. The findings carry direct implications for macroprudential policy, as early-warning signals from non-core regions may enhance national risk forecasting, affordability targeting and spatially responsive housing policy design.