The role of space in urban housing market

Joao Marques, Eduardo Castro () and Arnab Bhattacharjee

ERSA conference papers from European Regional Science Association

Abstract: This presentation emphasizes the quantitative analysis of space in relation to hedonic housing price models. Three aspects of space will be highlighted: i) spatial heterogeneity (spatial patterns): hedonic housing amenities may be valued differently in different locations which are related to specific housing sub-markets; ii) spatial dependence (spillovers): the degree by which price increases (or decreases) in a given sub-market is influenced by other sub-markets, or by another property within the same sub-market. iii) spatial scale: the study of heterogeneity and spillovers crucially depends on the level of geographical scale at which submarkets are defined. In the literature the difficulty of defining sub-markets and understanding the relationship between them is broadly identified, and appropriate methods for defining housing markets are also presented. However, there is not a consensus on which methodologies should be used. As a contribution to understand spatial structure (heterogeneity and spillovers) in urban spaces some empirical results will be presented. A new methodology to analyse spatial spillovers [rather than an ex ante definition of a spatial weight matrix (W)] will be developed. This procedure based on non-parametric approach will be applied to a rich database. An interesting outcome of this methodology is possibility of finding meaningful values of negative interaction.

Date: 2011-09
New Economics Papers: this item is included in nep-ure
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