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Regional house price convergence in Spain during the housing boom

Author

Listed:
  • Francisco Blanco

    (Universidad Rey Juan Carlos, Spain)

  • Victor Martín

    (Universidad Rey Juan Carlos, Spain)

  • Guillermo Vazquez

    (Universidad Rey Juan Carlos, Spain)

Abstract

The aim of this paper is to identify convergence clubs in house prices among Spanish regions over the period 1995:Q1 to 2007:Q4 and to investigate which factors are responsible for club formation. Employing a novel regression-based convergence test proposed by Phillips and Sul (2007) we find that regional house prices do not converge to a common trend, which confirms the existence of some degree of segmentation in the Spanish housing market. The research results support the existence of convergence clubs, indicating that Spanish regions form four separate groups that converge to different house price levels. Results of an ordered logit model suggest that differences in population growth, size of the rental market, initial house supply and geographical situation have played a crucial role in determining club membership.

Suggested Citation

  • Francisco Blanco & Victor Martín & Guillermo Vazquez, 2016. "Regional house price convergence in Spain during the housing boom," Urban Studies, Urban Studies Journal Limited, vol. 53(4), pages 775-798, March.
    • Handle: RePEc:sae:urbstu:v:53:y:2016:i:4:p:775-798
    DOI: 10.1177/0042098014565328
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    References listed on IDEAS

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    3. Holmes, Mark J. & Otero, Jesús & Panagiotidis, Theodore, 2019. "Property heterogeneity and convergence club formation among local house prices," Journal of Housing Economics, Elsevier, vol. 43(C), pages 1-13.
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