Understanding spatial house price dynamics in a housing boom

Leo Kaas, Georgi Kocharkov and Nicolas Syrichas

No 425, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: We examine the evolution of spatial house price dispersion during Germany's recent housing boom. Using a dataset of sales listings, we find that house price dispersion has significantly increased, which is driven entirely by rising price variation across postal codes. We show that both price divergence across labor market regions and widening spatial price variation within these regions are important factors for this trend. We propose and estimate a directed search model of the housing market to understand the driving forces of rising spatial price dispersion, highlighting the role of housing supply, housing demand and frictions in the matching process between buyers and sellers. While both shifts in housing supply and housing demand matter for overall price increases and for regional divergence, we find that variation in housing demand is the primary factor contributing to the widening spatial dispersion within labor market regions.

Keywords: House price dispersion; Spatial housing markets; Search frictions in housing markets (search for similar items in EconPapers)
JEL-codes: D83 R21 R31 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-mac and nep-ure
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https://www.econstor.eu/bitstream/10419/302566/1/1902511948.pdf (application/pdf)

Related works:
Working Paper: Understanding Spatial House Price Dynamics in a Housing Boom (2024)
Working Paper: Understanding Spatial House Price Dynamics in a Housing Boom (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:302566

DOI: 10.2139/ssrn.4946328

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