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A cross-sectional analysis of residential property prices: the effects of income, commuting, schooling, the housing stock and spatial interaction in the English regions

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  • Bernard Fingleton

Abstract

This article examines the distribution of residential property prices in 2001 across local areas in England using spatial econometric methods, showing that spatial variations in local income, income within commuting distance, the stock of residential properties and the quality of local schooling have significant effects. The residual spatial variation due to unknown factors is modelled by a proxy variable, but this does not rule out a significant spatial lag. The article argues that this represents endogenous interaction of property price levels between neighbouring areas, which is interpreted as the outcome of local market knowledge and preference, which produces greater price similarity between an area and its neighbours than one would anticipate from the levels of the exogenous price determinants. Copyright (c) 2006 the author(s). Journal compilation (c) 2006 RSAI.

Suggested Citation

  • Bernard Fingleton, 2006. "A cross-sectional analysis of residential property prices: the effects of income, commuting, schooling, the housing stock and spatial interaction in the English regions," Papers in Regional Science, Wiley Blackwell, vol. 85(3), pages 339-361, August.
  • Handle: RePEc:bla:presci:v:85:y:2006:i:3:p:339-361
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    References listed on IDEAS

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    1. Jørgen Lauridsen, 2006. "Spatial autoregressively distributed lag models: equivalent forms, estimation, and an illustrative commuting model," The Annals of Regional Science, Springer;Western Regional Science Association, pages 297-311.
    2. Jorgen Lauridsen & Birgit Nahrstedt, 1998. "Spatial patterns in intermunicipal Danish commuting," ERSA conference papers ersa98p441, European Regional Science Association.
    3. Mur, Jesus, 2002. "On the specification of spatial econometric models," ERSA conference papers ersa02p012, European Regional Science Association.
    4. Sergio Rey & Brett Montouri, 1999. "US Regional Income Convergence: A Spatial Econometric Perspective," Regional Studies, Taylor & Francis Journals, pages 143-156.
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    Cited by:

    1. Baltagi, Badi H. & Fingleton, Bernard & Pirotte, Alain, 2014. "Spatial lag models with nested random effects: An instrumental variable procedure with an application to English house prices," Journal of Urban Economics, Elsevier, vol. 80(C), pages 76-86.
    2. Li Dong & Le Canh, 2010. "Nonlinearity and Spatial Lag Dependence: Tests Based on Double-Length Regressions," Journal of Time Series Econometrics, De Gruyter, pages 1-18.
    3. Nguyen-Hoang, Phuong & Yinger, John, 2011. "The capitalization of school quality into house values: A review," Journal of Housing Economics, Elsevier, vol. 20(1), pages 30-48, March.
    4. Andrea De Montis & Simone Caschili & Daniele Trogu, 2014. "Spatial organization and accessibility: a study of US counties," Chapters,in: Accessibility and Spatial Interaction, chapter 6, pages 113-132 Edward Elgar Publishing.

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