Regional House Prices Research Articles

Dynamic effects of geopolitical risks and infectious diseases on real estate markets

PurposeGeopolitical risks (GPR) and increase in equity market volatility due to health pandemics have great implications on assets prices around the world. Many empirical studies have focused on the effects of these risks on different financial assets. The purpose of this paper is to contribute to this related literature by examining the dynamic effects of GPRs and infectious diseases–induced equity market volatility on regional and global house price indexes.Design/methodology/approachThis paper explores the asymmetric effects of infectious diseases and GPRs on house prices across different market conditions using the quantile regression approach. This technique enables us to examine the nonlinear asymmetric effects of GPRs and infectious diseases on both global and regional house price indexes using daily data from January 1, 2011, to June 3, 2022. It focuses on both the effects of a composite measure of GPR as well as the disaggregated effects of threats and acts (war) on the real estate markets under different market conditions.FindingsThe main findings of this study demonstrates that the effects of geopolitical and infectious diseases–related risks vary differently across regional real estate markets and the nature of the GPR. In particular, the effects of geopolitical threats are stronger than those of geopolitical acts, especially for the European, Asia-Pacific and North American regions during bullish market periods. Except for the effects of geopolitical threats during real estate market downturns, the African real estate market appears to be insulated from the effects of GPRs across all market conditions. Also, the authors show that infectious diseases increase losses in real estate investments when the market condition is bearish for all markets and could extend toward the normal market period for the North American, Asia-Pacific and European markets. However, across all the market conditions, the effects of the composite index of GPRs are not significant for the Asia-Pacific and European regional markets. Results are mixed for the remaining markets, especially for the global market. Whereas during bearish market periods, the effect is positive, it becomes negative when the market condition become normal and insignificant when it becomes bullish. For the North American and African regional markets, the effect is positive under the bearish market state.Originality/valueIncrease in equity market volatility due to infectious diseases as well as conflicts and tensions among major powers, including potential risks of financial instability, all lead to significant increase in shocks to financial markets. To the best of the authors’ knowledge, this is the first study to analyze the asymmetric and comparative effects of GPRs and infectious diseases–related equity market volatility on real estate investments across different regions and market conditions. Because of the complexity of these risks and policy shifts, and the characteristics and heterogeneity of different regional financial markets, the impacts of shock from these risks are intuitively diverse, with practical implications for portfolio management.

RHPMF: A context-aware matrix factorization approach for understanding regional real estate market

The real estate market has a significant impact on people’s daily life. Therefore, it is crucial to understand the real estate market from both spatial and temporal perspectives, while there is still a lack of research in real estate industries. In this paper, a regional house price mining and forecasting (RHPMF) framework is proposed to help people intuitively understand the spatial distribution and temporal evolution of the urban estate market based on real-world housing data and urban contexts such as demographics and criminal records. Specifically, the RHPMF framework introduces a context-aware matrix factorization to extract crucial spatial and temporal price factors for revealing the housing market. Meanwhile, the RHPMF can forecast future regional house prices by manipulating the two price factors. Consequently, this study presents extensive exploratory analysis and experiments in Virginia Beach, Philadelphia, and Los Angeles to verify the proposed RHPMF. These case studies indicate that the RHPMF framework can accurately capture the market’s spatial distribution and temporal evolution and forecast future regional house prices compared with recent baselines. The experimental results suggest the great potential of the proposed RHPMF for applications in real estate industries.

Time-varying impacts of monetary policy uncertainty on China's housing market

We investigate how the monetary policy uncertainty (MPU) affects China's regional housing prices. We extend the empirical literature on the relationship between MPU and housing prices by incorporating both time-varying features and core-periphery city network structures. Using the housing returns of 70 major cities from 2007 to 2020 and a newspaper-based MPU index for China, we find that the dynamics of spatial interdependence are negatively correlated with MPU, but the total effects of MPU on housing prices are divergent across different cities. Moreover, speculators tend to purchase houses in dominant (non-dominant) cities as MPU decreases (increases), leading to the so-called “flight-to-safety” effects. Our findings can be accounted for by cities' outstanding loan balance and unemployment rates. We highlight the role of MPU in determining regional housing prices, and call for regulating dominant cities when MPU level is high. • We augment a novel time-varying parameter spatial model with dominant cities. • Data-driven technique is used to identify dominant cities within the core-periphery structure. • Monetary Policy Uncertainty (MPU) affects China's housing prices heterogeneously. • The heterogeneity can be explained by city's loan balance and unemployment. • The flight-to-safety effects can explain the transmission of MPU to housing markets.

Determinants of Regional Disparities in Housing Prices: A Spatial Analysis of German Regions

Germany is characterised by heterogeneous regional development in various economic spheres, including housing markets. Differences in housing prices persist during decades, causing undesirable inequality, affecting migration and employment patterns. The purpose of this work is to identify regional factors which affect regional housing prices in Germany. The peculiarity of the study is the consideration of the spatial location of regions for analysing the influence of the characteristics of neighbouring regions. Based on data from 397 German regions for 2004-2019, spatial econometric panel data models are built, which consider both selling and rental prices. The following factors that affect demand in the housing market are used as determinants of housing prices: the unemployment rate, the balance of pendulum migration at the place of work and living, the share of employment, wages, the number of employees, gross regional product. The analysis findings revealed that factors that raise income for the population trigger an upsurge in demand and prices for housing. Conversely, opposite effects result in a decline in prices due to a decrease in demand. Moreover, it was verified that neighbouring regions mutually affect housing markets through pendulum migration and the creation of economic clusters with similar living standards and prices. Furthermore, changes in labour market metrics are crucial; unemployment, wages, and the number of workers in nearby regions have a significant influence on real estate prices in the area under examination. The study’s practical importance lies in the possibility of using its outcomes to develop regional and migration policies.

The nonlinear effect of macroeconomic and financial uncertainty on regional housing prices in the USA

The nonlinear effect of macroeconomic and financial uncertainty on regional housing prices in the USA

주택거래가격양극화지수 개발에 관한 연구

Since the recent COVID-19 outbreak, the so-called “housing price polarization phenomenon,” in which real estate inflation is aggravated and the regional housing price gap widens, is deepening. This study classifies and analyzes housing transaction polarization by housing and transaction types in 17 cities and provinces across the country through developing 'Housing Transaction Price Polarization Index'. Furthermore, this study suggests the HTPPI as an alternative way to review social and economic issues through analyzing them for more in-depth methodology with quantitative outcomes from the HTPPI.

Regional house price co-movement in the USA: the medium cycle is not the business cycle

Regional house price co-movement in the USA: the medium cycle is not the business cycle

The Effects of National Fundamental Factors on Regional House Prices: A Factor-Augmented VAR Analysis

Using panel data from 30 regions in China during the period 1999:01–2020:12, this paper evaluates the effects of national fundamentals affecting the movement of regional house prices by estimating a factor-augmented VAR model. We construct and examine a hypothesis that national fundamentals affecting regional house prices, such as monetary policy (short-term interest rate and M2), real output, and inflation rate, may affect regional house prices through their impacts on common factors. The empirical results show that monetary shocks (both interest rate and M2) can significantly affect regional house prices, but the effects are pretty different across regions. However, the effects of the real output and inflation rate are less important. Therefore, this study offers valuable information for regulators to improve the effectiveness of monetary policy to stabilize house markets from a regional perspective.

COVID-19 and entrepreneurial processes in US equity crowdfunding

ABSTRACT The COVID-19 pandemic brought about a shift in entrepreneurial opportunities in the United States. In this paper, we proxy entrepreneurial processes by examining housing prices in different regions of the United States. Housing prices capture the movement in people, tax dynamics, and behavioral preferences for equity ownership in different regions and over time, all of which were drastically impacted by COVID-19. We examine all US equity crowdfunding offerings starting with the very first offerings in 2016 Q2 until 2021 Q1 based on data from the Securities and Exchange Commission. The data indicate that regional housing prices post-COVID-19 are a strong predictor of the number of equity crowdfunding campaigns and the amount of capital raised. Moreover, the impact of housing price changes on crowdfunding is more pronounced among more prosperous regions. The housing price effect is robust to numerous controls and consideration of outliers.

Club convergence of regional housing prices in China: evidence from 70 major Cities

Club convergence of regional housing prices in China: evidence from 70 major Cities

The Propagation of Regional Shocks in Housing Markets: Evidence from Oil Price Shocks in Canada

AbstractThe response of Canadian housing markets to oil price shocks provides strong evidence that shocks to the demand for housing that originate in one region also raise house prices in other regions. We develop a theoretical model that helps understand this finding. The model differentiates between oil‐producing and nonoil‐producing regions and incorporates multiple sectors, trade between provinces, government redistribution, and consumer spending on fuel. We empirically confirm the model prediction that oil price shocks are transmitted to housing markets in nonoil‐producing regions by the government redistribution of oil revenue and increased interprovincial trade.

Understanding housing affordability to determine the best property search areas for homeowners moving out of London

In this paper we created a novel framework for understanding housing affordability in England using a linked house price dataset. Regional house price studies revealed that after the global economic crisis, there was an unprecedented regional house price divergence driven by faster price increases in London from 2009 onwards. To ease England’s resulting housing affordability issues, we consider the scenario of a typical London homeowner to offer a new insight into local housing affordability by different property type in England and explore the best property search areas for homeowners moving out of London.

Do regional house prices converge? Evidence from a major developing economy

This paper analyzes the long-run convergence of regional house prices in a major developing country, Turkey. Using a non-linear time-varying factor model and quarterly hedonic house price data from 2010 to 2018, we find that house prices do not converge across 26 regions of Turkey. Results reveal that the regions can be grouped into seven convergence clubs and one divergent club, confirming the Turkish housing market’s heterogeneity and complexity. We extend the analysis to explore the possible factors driving the convergence clubs. We find that income, population, education, unemployment, being in an earthquake zone, and inflow of Syrian refugees are significant driving forces in explaining convergence club formation. These outcomes will benefit home buyers/sellers, investors, regulators, and policymakers interested in analyzing the dynamic interlinkages among house prices and the effects of shocks originating from the regional housing markets in developing countries.

The Asymmetric Effects of Regional House Prices in the UK: New Evidence from Panel Quantile Regression Framework

This study unfurls the non-linear behaviour of regional house prices in the United Kingdom by employing quarterly observations spanning the period 1992Q1–2017Q4. Our enquiry aims at examining UK house prices within a multivariable framework and, more specifically, by employing panel quantile regression with fixed effect. In brief, the empirical findings obtained from these methodologies indicate that the UK house prices are influenced at lower and upper quantiles, and that precisely they are influenced by variables such as income, private sector housing starts and employment. We highly support that there is a strong heterogeneity among UK regions and that asymmetry may be one of the keys of the ripple effect. Particularly, the income shows a positively significant performance at lower and higher regional house prices. Moreover, the variables private sector housing starts and employment rate are statistically significant for house prices. Leveraging for first-time panel quantile regression for the case of regional house prices in the UK, policymakers will have a profound understanding of regional house prices. JEL Classifications: C22, R21, R31

COVID-19 and Entrepreneurial Processes in U.S. Equity Crowdfunding

COVID-19 brought about a shift in entrepreneurial opportunities and in the United States. In this paper, we proxy entrepreneurial processes by examining housing prices in different regions of the United States. Housing prices capture the movement in people, tax dynamics, and behavioral preferences for equity ownership in different regions and over time, all of which were drastically impacted by COVID-19. We examine all U.S. equity crowdfunding offerings starting with the very first offerings in 2016 Q2 until 2021 Q1 based on data from the Securities and Exchange Commission. The data indicate that regional housing prices post-COVID-19 are a strong predictor of the number of equity crowdfunding campaigns and the amount of capital raised. The impact of housing price changes on crowdfunding is more pronounced among more prosperous regions. The housing price effect is robust to numerous controls and consideration of outliers.

The consumption response to borrowing constraints in the mortgage market

This paper shows that relaxing borrowing constraints positively affects household consumption in addition to stimulating housing market activity. We focus on the UK Help-to-Buy (HTB) program, which provided a sudden relaxation of the down payment constraint by facilitating home purchases with only a five percent down payment. Our research design exploits geographic variation in exposure to HTB and uses administrative data on mortgages and car sales in combination with household survey data. We estimate that the program increased total home purchases by 11 percent, and the increase was driven almost entirely by first-time and young buyers. Regions that were more exposed to the program experienced a rise in non-durable consumption unrelated to the home and in loan-financed car purchases, in addition to an increase in home-related expenditures. These results are independent of changes in regional house prices. Our findings point to a further link between the housing market and household consumption that does not operate through the home purchase and housing wealth channels.

Regional House Price Co-Movement in the Us: The Medium Cycle is Not the Business Cycle

Regional House Price Co-Movement in the Us: The Medium Cycle is Not the Business Cycle

Regionally Heterogeneous Housing Cycles and Stabilization Policies

Housing cycles can vary significantly across regions. This study investigates the macroeconomic implications of regionally heterogeneous housing cycles and stabilization policies. The general equilibrium model includes two separate regions, idiosyncratic shocks in regional housing markets, and inter-regional housing investments by households. Counterfactual simulations suggest that regional housing cycles can be a source of economic inequality between regions and the level of financial status by affecting consumption, housing service, debt and welfare asymmetrically across agents. Region-specific stabilization policies such as property tax, countercyclical loan-to-value, and housing supply policies can mitigate regional housing cycles, but it takes large policy responses if the cycle is caused by housing exuberance (demand) shocks. Those policies also have asymmetric welfare effects, while housing supply policy is the most beneficial to agents in the region that experiences the cycle. Leaning against the wind monetary policy is relatively ineffective in stabilizing regional housing prices and higher interest rates during housing price appreciations lower the welfare of borrowers in all regions.

아파트가격 지역 간 전이효과 분석

아파트가격 지역 간 전이효과 분석

A simple measure of beta-convergence revisited

Convergence among regions to long-run, non-zero income differentials is predicted by mainstream and alternative spatial theories. A variety of convergence, considered by Sala-i-Martin, focuses on the rank order over time. As some must be growing faster than others, intra-distributional mobility implies convergence of regions. A measure of this from Boyle and McCarthy is the trend in rank concordance. As it is a measure of similarity between a given distribution and other sample periods, we propose that Kendall’s criterion ranking coefficient, combined with concordance, provides better insight into intra-distributional mobility and convergence. Agreement with a distribution can be traced over a series to highlight the mobility over time. This has the advantage of revealing whether mobility entails converging from, reverting to or converging to an order. Although there are phases of sigma-convergence and divergence, what is found in an analysis of regional house prices is that the rank-order is little affected by cycle phase. In trend, the UK price distribution appears to converge to a hierarchy, corresponding better with a very large monocentric urban model or Zipf-type, than a core–periphery-type distribution of prices. The broadening of price spreads is likely to be facilitated by the liberalisation of finance seen elsewhere, and by an appetite for greater mortgage debt.