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The influence of recurrent property income and expenditure on house prices in European Union countries: Evidence from a panel model

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  • Angelovska Julijana

    (University of Tourism and Management in Skopje, Faculty of Economics)

  • Časni Anita Čeh

    (University of Zagreb, Faculty of Economics and Business)

Abstract

Land value capture can be defined as a policy approach that allows communities to restore and reinvest land value increases that result from public investment and other government actions. For that reason, public action should generate public benefit. The recurrent property tax, one of many tools for land value capture, is the foundation of a stable, enduring revenue source that supports the provision of essential housing and amenities services. This empirical paper aims to examine the influence of recurrent property tax income, and general government spending on housing and community amenities on house prices. To assess the hypothesized direction of the effects, yearly data structured in a balanced panel on a sample of 26 European Union economies from 2010 to 2019 was used. Fixed effects regression model with Driscoll and Kraay standard errors was employed and the results confirmed a negative but statistically insignificant effect of increased property tax revenue on house prices, while increased expenditure on housing and amenities confirmed a positive and statistically significant effect on house prices dynamics in European Union countries.

Suggested Citation

  • Angelovska Julijana & Časni Anita Čeh, 2022. "The influence of recurrent property income and expenditure on house prices in European Union countries: Evidence from a panel model," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 8(1), pages 32-40, June.
    • Handle: RePEc:vrs:crebss:v:8:y:2022:i:1:p:32-40:n:3
    DOI: 10.2478/crebss-2022-0003
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    References listed on IDEAS

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    More about this item

    Keywords

    European Union countries; fixed-effects model; house prices; public value capture; tax on land and buildings;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue
    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories

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