Modelling regional housing prices in Spain

Laura Álvarez Román () and Miguel Garcia-Posada
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Laura Álvarez Román: Banco de España
Authors registered in the RePEc Author Service: Laura Álvarez-Román

No 1941, Working Papers from Banco de España

Abstract: 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.

Keywords: house prices; fundamentals; cointegration; regional analysis (search for similar items in EconPapers)
JEL-codes: R30 R31 R32 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2019-12
New Economics Papers: this item is included in nep-eur and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1941

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