Panel analysis of home prices in the primary and secondary market in 17 largest cities in Poland

Krzysztof Olszewski () and Robert Leszczyński

Chapter 12 in Papers presented during the Narodowy Bank Polski Workshop: Recent trends in the real estate market and its analysis, 2013, 2013, pp 39-71 from Narodowy Bank Polski

Abstract: We analyse the determinants of house prices in the primary and secondary market of 17 largest cities in Poland during the 2002-2013 period. We find that prices are driven by economic fundamentals, such as income growth or rise in employment. Prices in the secondary market react to increases in the loan availability, that was driven by low interest rates resulting from FX denominated housing loans that were granted since 2006. This finding does not hold for the primary market, which is to a large extent financed with cash. We confirm empirically that the house appreciation in the past period has a strong effect on the current price, which confirms herding behaviour in the housing market. Another finding is that the secondary market has a stronger effect on the primary market than the other way around. This means that housing demand is satisfied in the first place from the secondary market, and if prices rise, potential buyers go to the primary market. Finally, we find that price increases in Warsaw spill over to the local markets of 16 regional cities. This finding is consistent with the contagion theory in the real estate market, according to which price increases in the centre lead to price increases in the periphery.

Keywords: housing market; house prices; primary and secondary market; spillover effects (search for similar items in EconPapers)
JEL-codes: E21 R21 R31 (search for similar items in EconPapers)
Date: 2013
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Panel analysis of home prices in the primary and secondary market in 17 largest cities in Poland (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:nbp:nbpchp:12

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