Regional House Prices Research Articles

An analysis to detect exuberance and implosion in regional house prices in Turkey

The aim of this paper is to find out whether there is exuberance in regional house prices in Turkey. For this purpose, we analyze real hedonic house prices and price to rent ratios countrywide as well as for 26 geographic regions at the NUTS2 level from January 2010 to January 2019. We perform the right-tailed unit root testing procedures developed by Phillips et al. (2015) and Phillips and Shi (2018) and use their real time date-stamping strategy to determine periods of explosiveness and implosion. Our empirical findings indicate that there were exuberance episodes in house prices in Turkey for multiple periods, where an important contributor to these dynamics was the largest housing market, İstanbul. We also detect exuberance in some other regions, particularly in the neighboring NUTS2 regions of İstanbul and in İzmir after around 2014. However, we find out that explosive price behavior turned into implosion in many regions starting from 2018.

Regional economic divergence and house prices: a comparison of Germany and the UK

PurposeIncreasing regional wealth disparities have been explained by the role of agglomeration economies and the concentration of skilled mobile human capital. This paper aims to draw out the role of the housing market by considering the differential experience of Germany and the UK.Design/methodology/approachThe empirical analysis is based on the comparison of regional house price trends in Germany and UK-based annual data from 1991 to 2015.FindingsRegional house price inequality is found to have increased in both countries with the spatial concentration of skilled human capital. However, the main conclusion is that there are differential paths to regional house price inequality explained by the parameters of each country’s housing market.Originality/valueThe research is the first to compare and explain differential regional house price trends across countries.

The Dynamic Impact of Monetary Policy on Regional Housing Prices in the United States

AbstractThis article uses a factor‐augmented vector autoregressive model to examine the impact of monetary policy shocks on housing prices. To simultaneously estimate the model parameters and unobserved factors, we rely on Bayesian estimation and inference. Policy shocks are identified using high‐frequency surprises around policy announcements as an external instrument. Impulse response functions reveal differences in regional housing price responses, which in some cases are substantial. The heterogeneity in policy responses is found to be significantly related to local regulatory environments and housing supply elasticities. Moreover, housing prices responses tend to be similar within states and adjacent regions in neighboring states.

Regional airline capacity, tourism demand and housing prices: A case study of New Zealand

Tourism is one of the most important economic activities in New Zealand as tourists commonly travel by air to the various regions of this geographically isolated archipelago. This paper aims to investigate: (i) how regional tourism demand and airline capacity affect each other; and (ii) how both affect the housing prices in New Zealand's smaller regions. The paper empirically examines these inter-relationships between regional tourism demand and air transport, and their joint effects on the housing prices by constructing a three-stage least squares (3SLS) structural model employing a panel dataset of New Zealand's six smaller airports and regions from January 2008 to December 2014. Empirical results showed that increased regional tourism activity raises airline capacity and vice versa. Importantly, domestic airline capacity has a statistically significant impact on regional housing prices but not regional tourist demand (with the exception of Queenstown as a major and popular tourist centre). Policy implications of the key findings for regional tourism and air transport developments are discussed.

Analysis on the Dynamic Relations of Regional Housing Prices in Ulsan Metropolitan City

Analysis on the Dynamic Relations of Regional Housing Prices in Ulsan Metropolitan City

Are Business Start-Ups Liquidity Constrained? Evidence from a Quasi-Experimental Allocation of Housing Wealth in East Germany

Are entrepreneurs liquidity constraint? Using quasi-random housing wealth variation resulting from communist era decisions, we argue yes, as we find that wealthier East Germans are more likely to become self-employed after reunification. In the literature, no such strong relationship was found using regional house price changes the US and UK. In these economies, our results suggest, the effects of liquidity constraints are masked by anticipatory savings of the would be self-employed, which was impossible for the East Germans in our sample due to communism.

House price affordability, the global financial crisis and the (ir)relevance of mortgage rates

ABSTRACTAlthough house prices and wages are both influenced by distinct factors that shape their own evolutions, they are also intrinsically connected through house price affordability. Further, macroeconomic policies centred around adjustments in the mortgage rate are of prime importance in ensuring that the housing market does not overheat. This study contributes to the understanding of the link between housing market affordability and mortgage rates by investigating this association across regions of New Zealand using quarterly data between 2000 and 2017. Applications of trajectory regression reveal that the global financial crisis affected regional house price affordability asymmetrically and there was no statistically significant correlation between house price affordability and mortgage rates.

Modelling Regional Housing Prices in Spain

We estimate the long-run relationship between real housing prices of new dwellings and their fundamentals in a panel of the 50 Spanish provinces between 1985 and 2018. We find a cointegrating relationship between real house prices and per capita real income, unemployment rate and demographic density. According to our estimates, house prices were above their long-run equilibrium values in most provinces in 2007, during the peak of the previous boom, but there was substantial heterogeneity in the size of this gap. At the end of 2018 house prices were slightly below their estimated long-run equilibrium values in most provinces, but a few of them exhibited moderate positive deviations from those levels. Our results highlight the importance of modelling house prices at the regional level, as aggregate results may hide important heterogeneous developments.

Amsterdam house price ripple effects in the Netherlands

Purpose: This paper examines the existence of the ripple effect from Amsterdam to the housing markets of other regions in the Netherlands. It identifies which regional housing markets are influenced by house price movements in Amsterdam. Design/methodology/approach: The paper considers the ripple effect as a lead-lag effect and a long-run convergence between the Amsterdam and regional house prices. Using the real house prices for second-hand owner-occupied dwellings from 1995q1 to 2016q2, the paper adopts the Toda-Yamamoto Granger Causality approach to study the lead-lag effects. It uses the ARDL-Bounds cointegration techniques to examine the long-run convergence between the regional and the Amsterdam house prices. The paper controls for house price fundamentals to eliminate possible confounding effects of common shocks. Findings: The cumulative evidence suggests that Amsterdam house prices have influence on (or ripple to) all the Dutch regions, except one. In particular, the Granger Causality test concludes that a lead-lag effect of house prices exists from Amsterdam to all the regions, apart from Zeeland. The cointegration test shows evidence of a long-convergence between Amsterdam house prices and six regions: Friesland, Groningen, Limburg, Overijssel, Utrecht and Zuid-Holland. Research limitations/implications: The paper adopts an econometric approach to examine the Amsterdam ripple effect. More sophisticated economic models that consider the asymmetric properties of house prices and the patterns of interregional socio-economic activities into the modelling approach are recommended for further investigation. Originality/value: This paper focuses on the Netherlands for which the ripple effect has not yet been researched to our knowledge. Given the substantial wealth effects associated with house price changes that may shape economic activity through consumption, evidence for ripples may be helpful to policy makers for uncovering trends that have implications for the entire economy. Moreover, our analysis controls for common house price fundamentals which most previous papers ignored.

The Uncertainty of House Prices and Real Options in China

This study investigates the real options with spatial analysis in China’s real estate markets. We employ new detailed macro-level data set for 31 provinces in China to test the central predictions of real options with respect to land development. We extended the real options method with spatial Durbin model (SDM), making this the first time that real option predictions have been tested in a spatial manner. We also examine the tests of SDM including spatial fixed measures, time fixed measures, and spatial and time fixed measures of expected future prices and price uncertainty. This method improves the accuracy of predicting the value of house prices and considers the neighbouring regional house prices. We measure the degree of price uncertainty by a generalized autoregressive conditional heteroskedasticity (GARCH) model. To explore for the presence of real options in house prices, vacant land sales price is regressed on SDM measures of future house price uncertainty. Moreover, we employed Black-Scholes’ (1973) pricing model to explore the option premium of land value. The weight of the evidence in this paper suggests there are real options in China’s real estate markets. Uncertainty about future house prices of neighbouring regions drives up land prices in China. The findings suggested that uncertainty about future housing prices of neighbouring regions decreases investment activity in the current period; uncertainty about future house prices of neighbouring regions raises land prices above the discounted stream of rents in their current use.Market house prices of neighbouring regions reflect a premium for optimal development, which based on our estimates has a mean of 16.28% of the land value. A one-standard-deviation increase in uncertainty lowers the likelihood of development by 1.101%.

An analysis of regional house prices in Greece

PurposeThis paper aims to examine the housing market in Greece after the Global Financial Crisis focussing on regional analysis and urban markets in Athens and Thessaloniki.Design/methodology/approachThe paper uses a data set of over 70,750 property values from 2007 until 2014 incorporating characteristics variables upon which hedonic models are estimated. These form the bases for calculating value indices for mix adjusted houses/apartments by year and region. The indices are used in a panel model in which regional and economic variables are included as independent variables. Using advances in dynamic panel data modelling, a bias-corrected least squares dummy variable corrected (LSDVC) model is applied.FindingsResults indicate the importance of macroeconomic variables in terms of the role of disposable income and significantly different regional effects. Examining the major urban markets, results indicate significant differences in the response of house values to exogenous demand side influences, consistent with the finding of significant regional differences in the LSDVC.Research limitations/implicationsWhile data on valuations are used that may contain smoothing, the data set covers a large sample of residential properties. As regional economic differences are significant and persistent, housing markets will also behave differently, and hence national policies, unless targeted, will have regionally differentiated effects.Practical implicationsRegional heterogeneity needs to be considered in model estimation.Social implicationsPolicymakers should consider regional differences to improve policy effectiveness.Originality/valueThis is the first paper to use a large sample of residential properties in Greece and apply the LSDVC model to overcome estimation biases.

Left‐right Orientation, Homeownership and Class Position in Sweden

Sweden is a country where left‐right orientation structures the political landscape, homeownership is increasingly important, and the importance of class for political preferences and behavior is changing or even weakening. This article explores the significance of homeownership for left‐right orientation in Sweden, and extends the relationship to include class position. By combining detailed cross‐sectional survey data with data on regional house price variations it suggests that homes function as an economic asset that affects individual political preferences. Furthermore, the relationship between homeownership and left‐right orientation is expected to be driven by particular class groups, whose labor market position imply a more leftist orientation, while their status as homeowners imply a more rightist one. The expectation is borne out, which indicates that the asset function of homes help accounting for changing class patterns of left‐right orientation in Sweden.

Relationships among regional housing markets: Evidence on adjustments of housing burden

High regional house prices relative to income may result in residents moving to other regions with lower housing burden; this generates relationships among regional housing markets. From this perspective, this study employed Markov-switching models to examine housing affordability in 10 regional housing markets in the UK. The results show that levels of housing burden among regions are related, thereby proving that a high cost of housing burden in one region may result in residents buying houses in other regions. Moreover, this study found that house prices in most regions tend to converge with income levels but are asymmetric within the period of convergence. Specifically, because the period of high housing loans lasts longer, and vice versa, housing demand increases as soon as house prices drop. Thus, periods of “inexpensive” house prices do not last long. This paper explains why living costs in different regions are related, and proposes that housing demands may have asymmetric reactions when house prices are too high or too low.

U.K. House Prices: Bubbles or Market Efficiency? Evidence from Regional Analysis

This paper studies U.K. regional house prices across nine regions from January 2005 to December 2017 to identify regional versus national effects on house prices and potential house price bubbles. It uses a version of the Gordon dividend discount model, modelling house prices as the present value of imputed rents as a measure of fundamentals. It differentiates between long-term and short-term effect using pooled mean group (PMG) and mean group estimation (MG) to determine variations in regional house prices during different periods relating to the most recent financial crisis. The results confirm that the crisis had differentiating effects in the short term, but there is reversion back to long-run fundamentals. Regional trend analysis shows that the house price growth in the regions has been affected differently in the short run and each region has varying long-run fundamentals. Residential property values in London have shown strongest short-run momentum.

The cause and outcomes of the ripple effect: housing prices and transaction volume

In this study, the ripple effect in four regional housing markets in the USA (Northeast, Midwest, South, and West) was examined by analyzing housing prices, which is a method that has been primarily used in other studies, and the transfer of information in the transaction volume data of regional markets. First, the ripple index between regional housing markets was estimated using housing price and transaction volume. Findings revealed that the ripple effect in the transaction volume of regional housing markets was far more evident than that in housing prices and that the two types of ripple effect are negatively correlated. In other words, information between regional housing markets is either transferred through price or volume. In this study, monetary policy, overall economic performance, and new housing market were adopted as variables to analyze the cause and outcomes of the ripple effect. The results show that inflation stemming from an excess supply of money causes a ripple effect of rising regional housing prices. This money illusion leads contractors to believe that the housing market has increasing demand, motivating them to enter into new projects. Once these projects are completed, the increase in supply (new homes for sale) is reflected in the transaction volume of the regional housing market. In this instance, a stagnation in housing prices signifies that information is only transferred in the transaction volume. In short, the rise (housing boom) and fall (housing depression) of transaction volume affect interest rates in the mortgage market.

The Effects of Regional Housing Prices on the Age at Marriage and the Timing of First and Second Childbirths

The Effects of Regional Housing Prices on the Age at Marriage and the Timing of First and Second Childbirths

Convergence of Regional Housing Prices in China

AbstractThis paper uses the sequential panel selection method (SPSM) to examine the structure convergence of regional housing prices in China. The stationary processes are distinctly detected and r...

Mind the gap: implications of overseas investment for regional house price divergence in Britain

The UK has had a long-standing regional house price gap with prices in London much higher than the rest of the UK. Using price data from 1969 to 2016 we track price differentials through several cycles of boom and bust, and note the growing divergence of London, particularly central London, from the rest of Britain. In explaining this divergence, we highlight the growing importance of international investment since the global financial crisis. We conclude that, although ‘Brexit’ may have brought the latest long London boom to a close, there is nothing to suggest that the regional house price gap will close. Given the ongoing importance of global financial inflows to major world cities, this has significant implications for how governments approach affordability and housing policy.

Analysis of the Regional Housing Price using Panel Data: Focusing on the Comparison of the Period Before and After the Global Financial Crisis

본 연구는 패널 VAR 모형으로 글로벌 금융위기 전후 기간의 지역별 주택매매가격 변화를 기간별로 비교 분석하였다. 주택매매가격에 영향을 주는 변수로는 전입건수와 주택거래실적, 소매판매액지수, 가계대출 잔액을 이용하였다. 분석 결과, 전체 기간 중 전국 기준 주택매매가격은 주택매매가격 자체와 주택거래실적에 유의한 양(+)의 반응을 보였다. 글로벌 금융위기로 기간을 구분한 분석에서는 전국 기준주택매매가격이 위기 이전 기간과 위기 이후 기간에 각각 소매판매액 충격과 가계대출 충격에 유의한 양(+)의 반응을 보였다. 수도권 지역의 주택매매가격은 위기 이전 기간에 소매판매액 충격에 양(+)의 반응을 보이다가 위기 이후 기간에는 음(-)의 반응을 보였다. 한편, 비수도권 지역은 위기 이후 기간에 가계대출 충격이 주택매매가격에 양(+)의 영향을 주는 것으로 나타났다. 이와 같은 결과들을 종합할 때, 향후 부동산관련 정책 수립 시 소비재와 투자재의 성격을 모두 갖고 있는 주택매매가격의 특성이 고려되어야 할 것이다. 아울러 시기와 지역에 맞는 다양한 변수들에 대한 종합적인 분석도 필요할 것으로 보인다.This study empirically examined the changes in the domestic housing market by region in the aftermath of the global financial crisis. The panel VAR model was used to estimate the change in housing sales price in the period before and after the global financial crisis, using several variables such as internal migration, housing transactions, retail sales index, and household loan balances. As a result of the analysis, nationwide housing sales price showed a positive response to housing sales price and transactions. At the time of the global financial crisis, nationwide housing sales price showed a positive response to the retail sales shock and the household loan shock in the pre-crisis period and post-crisis period respectively. In metropolitan areas, housing sales price showed a positive response to the retail sales impact in the pre-crisis period and a negative response in the post-crisis period. On the other hand, in non-metropolitan areas, the impact of the household loan shock on the housing sales price positively affected in the post-crisis period. The results of this study demonstrated that the housing sales price vary not only in time and region but also in the underlying variables that affect housing price. Therefore, characteristics of housing sales price, which include both consumer and investment properties, should be considered when establishing real estate related policies in the future.

지역의 주택가격이 결혼과 자녀 출산에 미치는 영향

지역의 주택가격이 결혼과 자녀 출산에 미치는 영향