Abstract
ABSTRACTThis paper analyses the house price diffusion effect in an economic-mixed region where the costal amenities strongly attracts second home and temporal residents while the main region’s city is an administrative centre in alicante province, Spain. The region is called Vega Baja country with 2 well known foreign-Europeans destination areas are located (Orihuela costa and Torrevieja). Using geo-referenced data, the paper explores the ripple effect on house prices between the coastal and inland areas, versus Orihuela capital. To control by heterogeneity and spatial autocorrelation, the model estimates housing prices controlled by quality including 33 house characteristics and spatial autocorrelation applying an SAR-hedonic based model which is estimated yearly for the period 2007–2012. Once controlled by quality, the estimated prices are used to seek 3 evidences of ripple effect: with spatial contiguity (spatial diffusion in the short distance), without special contiguity (long distance) and constant ...
Highlights
House prices have received increasing attention since the start of the Global Financial Crisis (GFC) because many has seen in the house price sinking to have part of the crisis responsibility
This paper focuses on Spain and explores the existence of ripple effect in housing prices among one area receiving large flows of foreign homeowners, with the inland and the capital in the Vega Baja, a county in the south of Alicante
The capital, Orihuela, is the administrative center of a well-known tourist area but both are physically separated around 25 kilometers. Such separation allows to observe the effect on housing prices of different demand drivers and converts the Vega Baja in a good laboratory to bet
Summary
House prices have received increasing attention since the start of the Global Financial Crisis (GFC) because many has seen in the house price sinking to have part of the crisis responsibility. The EU authorities included house price growth rate into the list of indicators to be followed to monitoring (macro) economic imbalances and it is recognized that house prices have played a role in the lack of household affordability to housing having social impacts This interest grew after a long list of analysis deepening on how the housing bubble formation happened, and giving different evidence about how the three different groups of variables (the general-global influences, the specific-local demand shocks and the diffusion effects from other closer areas) affected to prices. Most economic indicators show those effects in macro aggregates as a double “v” in two well defined periods, 2007–2009 and 2010–2014, whilst some research have demonstrated the impact of the double-crisis on Spanish house new supply and prices (Taltavull 2013; Taltavull, Gabrielli 2015) Those shocks would have influenced in the long term house price structure.
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