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Rents and House Prices in the Portuguese Residential Real Estate Market

Author

Listed:
  • Meira, Sérgio

    (Mestrado em Gestão - FEP)

  • Costa, José da Silva

    (FEP)

Abstract

To better understand the evolution of real estate prices and rents in Portugal, in this paper we examine the Portuguese rental market by comparing house prices of Portuguese homes and rents paid by Portuguese people who are living in rented homes. The literature regarding rent and house prices agree that these variables should be positively correlated. We use time series indexes of both rent prices and house prices to study the long-term relationship between them, using the Engel-Granger Co-integration Model, and to determine if we can predict future changes in one of the variables using the other, using correlation analysis and Granger causality tests. Since there is a lack of studies focusing on the Portuguese real estate market, this study tries to open the door for future analysis in this segment.

Suggested Citation

  • Meira, Sérgio & Costa, José da Silva, 2019. "Rents and House Prices in the Portuguese Residential Real Estate Market," FEP Working Papers 618, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:618
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    File URL: http://www.fep.up.pt/investigacao/workingpapers/wp618.pdf
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    More about this item

    Keywords

    Portuguese real estate market; House prices; Rent prices; Co-integration; Granger Causality;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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