Abstract
Abstract In both the global and the domestic approach, the real estate market is a multifaceted domain of study, constituting a specific and imperfect system. Researchers have to rely on increasingly advanced analytical tools to capture the structural complexity of real estate markets. Real estate prices are influenced by contradictory behaviors of market participants. This observation prompted the authors to analyze the income and price elasticity of demand for housing by calculating elasticity coefficients in view of changes in housing prices and the Veblen effect. This problem was analyzed based on a review of the literature and the results of an experiment. The results of the current study can be used to confirm the presence of the Veblen effect on the housing market based on the adopted criteria. The coefficients of price and income elasticity of demand for housing were calculated in view of the price dynamics on the real estate market to paint a more complete picture of reality and explain market processes.
Highlights
The dynamic increase in real estate prices in the long-term perspective as well as present housing prices indicate that residential property is becoming less affordable and is increasingly perceived as a luxury good
The aim of this study was to explain the current behavior of real estate market participants by calculating elasticity coefficients based on price dynamics in a period characterized by a rapid increase in housing prices
The aim of the study was to analyze the income and price elasticity of demand for housing by calculating elasticity coefficients based on real estate price dynamics
Summary
The dynamic increase in real estate prices in the long-term (multi-annual) perspective as well as present housing prices indicate that residential property is becoming less affordable and is increasingly perceived as a luxury good. During the boom on the Polish housing market in Q3 2007, the housing affordability index (expressed by the number of square meters of residential property that can be purchased at the average price by a buyer with an average income in the enterprise sector) reached 0.49 (NBP 1). Namely the number of square meters of residential property that can be purchased with a mortgage loan by a buyer with an average monthly income in the enterprise sector at the average transaction price, was estimated at 65 sq. The real estate market is full of contradictions, and the difference between average housing prices and the prices of “luxury” homes continues to increase (cf Bełej, 2016)
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