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The rise in Dublin city house prices: bubble, fad or just fundamentals

Author

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  • Maurice J. Roche

    (Department of Economics, National University of Ireland, Maynooth, Ireland)

Abstract

The recent dramatic rise in house prices in Dublin has been regularly discussed in the media. An obvious question is whether the seemingly ever-increasing house prices are driven by market fundamentals or by speculation? While the observed increase in house prices is due to excess demand for housing, it is the nature of this excess demand that we investigate in this paper. We decompose house prices in Dublin into fundamental and non-fundamental components using a variety of measures. A regime-switching model is estimated and tested to explore whether speculative bubbles, fads or just fundamentals drive house prices in Dublin. Our main findings suggest that there may be a speculative bubble in the Dublin house prices.

Suggested Citation

  • Maurice J. Roche, 1999. "The rise in Dublin city house prices: bubble, fad or just fundamentals," Economics Department Working Paper Series n920799.pdf, Department of Economics, National University of Ireland - Maynooth.
    • Handle: RePEc:may:mayecw:n920799.pdf
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    More about this item

    Keywords

    Regime-switching; House prices; Bubbles; Fads;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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