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The Financial Crisis and Diverging House Prices: Evidence from the Copenhagen Metropolitan Area

Author

Listed:
  • Ismir Mulalic

    (Technical University of Denmark)

  • Holger Rasmussen

    (Institute for Urban Economic Research, Denmark)

  • Jan Rouwendal

    (University of Amsterdam; Tinbergen Institute, The Netherlands)

  • Hans Henrik Woltmann

    (Institute for Urban Economic Research, Denmark)

Abstract

This paper investigates the development of house prices in Copenhagen in the period 1994-2013, while paying special attention to the heterogeneous impact of the boom and bust periods along the dimensions of housing type (single vs multifamily housing), geography and quality. To allow for price developments that can differ by quality, we use a recently developed generalization of the conventional Muth model that assumes a constant unit price across the quality spectrum. It allows us to separately consider the development of house prices and quality in Copenhagen neighbourhoods. Moreover, we investigate the validity of the common assumption of a constant unit price and reject it decisively. We use detailed housing transaction data for the greater Copenhagen area. We show that the housing boom of the 2000’s and the bust that followed hit the lowest quality segments significantly harder than the high quality segments of the housing market.

Suggested Citation

  • Ismir Mulalic & Holger Rasmussen & Jan Rouwendal & Hans Henrik Woltmann, 2017. "The Financial Crisis and Diverging House Prices: Evidence from the Copenhagen Metropolitan Area," Tinbergen Institute Discussion Papers 17-084/VIII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20170084
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    References listed on IDEAS

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    More about this item

    Keywords

    housing price; housing quality; housing price index;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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