An Analysis of Regional House Prices in Greece Using Dynamic Panel Data Modelling

The economy of Greece has experienced a significant contraction since the Global Financial Crisis (GFC) began in 2008. GDP has fallen substantially and unemployment is amongst the highest in Europe. House prices have fallen since 2009 and transactions have fallen since 2008. Yet the country has faced harsh austerity policies, which have compounded many of these problems, and it has experienced a longer period of falling house prices than other southern European countries as well as in comparison to European countries outside the Eurozone. At a regional level within Greece, while there has been evidence of correlation in housing market performance, some regional variation also exists. This paper seeks to analyse regional housing markets in Greece. To do so it employs a dataset of over 70,750 individual property values that covers the whole of Greece from 2007 until 2014. The dataset incorporates characteristics variables based upon which hedonic models are estimated. These form the bases for calculating value indices for mix adjusted houses/apartments by year and region. These indices are then used in a panel model in which regional and economic variables are included as independent variables. Using advances in dynamic panel data modelling, a bias-corrected least squares dummy variable model (LSDVC) is applied. Results indicate the importance of macroeconomic variables in terms of the role of disposable income and significantly different regional fixed effects.