Urban and Peri-Urban Residential Rental Markets in Wallonia: Similar or Different?

Abstract

Residential rents are analysed in the Walloon region in Belgium. In this region, affected by urban sprawl, households rent accommodation in urbanised areas as well as in their peripheries. While there is no statistical difference between the average observed rents per square meter in urban agglomerations and suburbs, does it mean that these areas compose a single market with identical rent determinants? Or that the same level of rents is determined by different drivers? The paper analyses the regional territorial structure and aims at determining the geographical rental submarkets based on urban / peri-urban delimitation. Traditional ordinary least squares (OLS) and geographically weighted regression (GWR) techniques are applied. With the latter method, the spatial autocorrelation in the residuals decreases, but remains significant. Particular attention is payed to the spatial distribution of the GWR coefficients. The Chow test and the weighted standard error provide an evidence of the existence of spatial-structural submarkets in the agglomerations and in the peri-urban areas in the biggest residential urban complexes of the region. The calculated market rent of a hypothetical standardized dwelling reveals a substantial dissimilarity between two areas: the rent of a typical dwelling is higher in peri-urban zones, up to 43.5% according to the OLS and up to 17.7% according to the GWR. With more recent dataset, we found that this tendency, which contradicts the classical urban theory, increases in time.