Property market operation: the perspective of original institutional economics

Abstract

The paper draws on original institutional economics to develop a holistic framework for analysis and understanding of the mechanisms, relations and dynamics through which the property market operates to (re)produce the built environment satisfying the requirements for use, investment and development. The impetus for this study lies in the difficulties that conventional economics face in incorporating property market processes (that is the processes through which actual outcomes are formulated and delivered) into their theoretical frameworks, something that leads them to seriously misinterpret the relationship between the market and the economy. The current approach places emphasis not only on the outcomes of market but also on the institutional structures, mechanisms, relations and dynamics, which are responsible for these outcomes. On these grounds the property market is perceived as an institution, comprising a wide network of (formal and informal) rules, rights, norms, practices, conventions, cognitive frameworks, organisations and relationships through which real property, and the build environment in general, is defined, generated, used and traded. In addition to the development of the theoretical framework the study moves on to lay down a generic analytical approach specifying appropriate research methods and techniques for investigating the institutional structure of the market. The methodological perspective put forward is holistic, evolutionary, critical and pluralistic. The Historical Comparative Institutional Analysis is regarded as the most appropriate approach for this kind of social research, employing the original institutional methods of "story telling" and "pattern modelling".