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Housing prices in Spain: convergence or decoupling?

Author

Listed:
  • Corinna Ghirelli

    (Banco de España (Eurosystem))

  • Danilo Leiva-León

    (European Central Bank)

  • Alberto Urtasun

    (Banco de España (Eurosystem))

Abstract

In this article, we measure changes in the synchronization of housing price cycles across Spanish cities over time. We rely on a regime-switching framework that identifies the housing price cycles of pairs of cities and simultaneously infers the evolving relation between those cycles. These bilateral relationships are then summarized into an aggregate index of city-level housing cycle synchronization. The estimates suggest that Spanish housing prices have followed a convergence pattern that reached a peak in 2009 and decreased slightly afterward. We also identify the cities that have been the main contributors to this convergence process. Moreover, we show that differences in population growth and economic structure are key factors in explaining the evolution of housing price synchronization among Spanish cities.

Suggested Citation

  • Corinna Ghirelli & Danilo Leiva-León & Alberto Urtasun, 2023. "Housing prices in Spain: convergence or decoupling?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 14(2), pages 165-187, June.
    • Handle: RePEc:spr:series:v:14:y:2023:i:2:d:10.1007_s13209-023-00275-1
    DOI: 10.1007/s13209-023-00275-1
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    More about this item

    Keywords

    Housing cycles; Synchronization; Spain;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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