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Bubble tests in the London housing market: A borough level analysis

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  • Panagiotis Petris
  • George Dotsis
  • Panayotis Alexakis

Abstract

In this study, we apply a recursive right‐tailed test to investigate for evidence of “bubbles” in the London housing market. We implement the test using data from all London boroughs. Aggregate tests indicate long periods of explosive behaviour of housing prices in the London residential market. Applying the test at a regional level, we identify house price booms in five boroughs, and we detect bubbles in only three, out of the total 32 London boroughs. The test finds no‐bubble condition in the inner London boroughs, even in the Prime Central London areas, where the highest house prices have been recorded.

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  • Panagiotis Petris & George Dotsis & Panayotis Alexakis, 2022. "Bubble tests in the London housing market: A borough level analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 1044-1063, January.
    • Handle: RePEc:wly:ijfiec:v:27:y:2022:i:1:p:1044-1063
    DOI: 10.1002/ijfe.2199
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