||Regional differences in housing price dynamics: panel data evidence
||Elias Oikarinen and Janne Engblom
||The aim of this study is to examine empirically the regional differences in housing price dynamics by estimating panel data models that allow for regional variation in the dynamics. In particular, we investigate whether there are large regional differences in the housing price “momentum” (“bubble builder”) and in the speed of adjustment of housing prices towards their long-run fundamental level (“bubble burster”). Using annual data for 14 Finnish cities for the period 1988-2009, we estimate fixed-effects models that include both main effects and interaction effects to allow for regional differences in the dynamics. While, the results indicate that the differences across regions are generally quite small in Finland, the analysis shows that the adjustment towards the long-run sustainable price level is significantly slower in the Helsinki Metropolitan area (HMA), the largest urban area in the country, than in the other cities. The results also provide evidence for cointegration between housing prices and income.
|Year of publication:
Elias Oikarinen and Janne Engblom (2012).
Regional differences in housing price dynamics: panel data evidence. 19th Annual European Real Estate Society Conference in Edinburgh, Scotland,