This paper represents the second from a research programme investigating whether neighbourhood interactions are important in local housing markets. A focus of this programme is on how segregated communities arise and the role that government policy can play in promoting integration. There are a number of possible analytical approaches of varying degrees of complexity, ranging from individual choice models to more aggregative studies. In this paper, we try to draw some of the approaches together, looking at the aggregate local market effects of individual decisions. Some of the implications of the model are tested, notably tendencies towards segregation, cumulative processes of growth and decline and non-linear behaviour. Although these tests are, by no means, complete they can be seen as a preliminary to other, more resource intensive modelling work to be conducted later in the programme.