Abstract/Summary

This paper investigates the dynamic causal relationships between regional housing markets and the national house price index in the United Kingdom from 2005 to 2024, capturing periods of economic expansion, financial crisis, post-Brexit uncertainty, COVID-19 disruption, and inflationary volatility. Drawing on a dual spatial framework, disaggregating the devolved nations and England’s NUTS1 regions, this study employs Granger causality testing alongside a triad of robust regression estimators (M-estimator, S-estimator, and MM-estimator) to detect persistent and directional price leadership patterns. Empirical results identify three English sub-regions (the North East, North West, and South West) as consistent ‘signal transmitters’ whose house price innovations significantly Granger-cause movements in the national index. In contrast, London and the South East exhibit diminishing bidirectional influence, suggesting post-pandemic price decoupling and weakening spatial arbitrage. These findings contradict classical ripple-effect assumptions and indicate increasing segmentation within the UK housing system. The analysis is further strengthened by a series of robustness checks that accounts for structural breaks, heteroskedasticity, and outlier bias, thereby increasing confidence in the model’s validity across the complex macro-financial cycles under investigation. The results carry material implications for policymakers, particularly the Bank of England, HM Treasury, and the Office for Budget Responsibility, as early-warning signals from peripheral regions could enhance macroprudential risk forecasting and affordability targeting. This paper contributes to the theoretical discourse on regional integration and market segmentation, offering a multi-scalar, statistically robust framework for assessing housing market dynamics in advanced economies. It also opens new directions for incorporating time-varying causality and spatial dependency into national housing policy design.