Causes and effects of spatial differentiation of prices in a polycentric metropolitan housing markets

Adam Polko, Wiktoria Jdrusik and Radoslaw Cyran

ERES from European Real Estate Society (ERES)

Abstract: The past three years have witnessed a dynamic surge in prices and rents within Poland's housing markets. The primary macroeconomic drivers behind this escalation are primarily attributed to high inflation, the influx of refugees from war-stricken Ukraine, and government initiatives that include subsidies for housing loans. These factors collectively contribute to an augmented demand in both primary and secondary housing markets, surpassing the current supply. The prevailing trend in the housing market is the dominance of investors viewing housing as a financial asset. In contrast, households perceiving housing as a consumer good face a discernible disadvantage in the current market dynamics.The dynamics within housing markets, inherently confined to local spatial contexts, exhibit non-uniformity. This heterogeneity is particularly pronounced in polycentric metropolises, where substantial variations in housing prices between neighbouring cities are prevalent. The primary objective of this research article is to elucidate the causes and effects of spatial disparities in prices within a polycentric metropolitan housing market. Employing transaction prices as exemplified over the past three years within housing markets of the Upper Silesian Metropolitan Region, the article seeks to address the following research questions: Do housing prices in central areas experience a more rapid escalation compared to those in the periphery? In instances of swift growth in housing prices, do discrepancies between prices in diverse cities intensify? What distinguishing characteristics define areas witnessing the most substantial price hikes, and conversely, those exhibiting minimal increases or even a decline in prices?The search for the reasons for the variation of housing prices in the metropolitan housing market will allow us to better understand the principles of the functioning of housing markets that are located in the immediate vicinity and differ due to the polycentricity of the metropolis. The interest of researchers and practitioners is usually focused on housing markets in the largest cities (in Poland, such as Warsaw, Krakow, Wroclaw, or Katowice) and neglects the analysis of price formation in medium and small cities located in metropolitan areas. Due to their immediate vicinity, transport connectivity, proximity to labour markets, medium and small cities often become an alternative for households unable to buy apartments in the centre of the metropolis. Spatial analysis of housing prices will allow the final section of the research paper to make recommendations for households to purchase housing in diverse metropolitan housing markets.

Keywords: Housing Markets; metropolitan regions; spatial economics (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2024-01-01
New Economics Papers: this item is included in nep-cis and nep-ure
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