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Historical decomposition of the Cyprus Residential Property Prices

Author

Listed:
  • Chryso Aristidou

    (Economic Analysis and Research Department, Central Bank of Cyprus)

  • George Thucydides

    (Economic Analysis and Research Department, Central Bank of Cyprus)

Abstract

The aim of this paper is to examine the main driving force(s) of residential property prices during various periods, via historical decomposition. This is achieved by establishing the contribution of di?erent structural shocks to the historical dynamics of the residential property price index. For every quarter in the sample, the growth rate of the residential property price index is decomposed into its di?erent components in order to assess the driving forces behind residential property prices ?uctuations. In e?ect, an insight into possible disconnection of property prices and economic fundamentals could potentially also be gained, thus providing indications of possible vulnerabilities building up in the sector, which would in turn impose risks on fnancial stability. Furthermore, emphasis is given on the recent surge in construction costs which is shown to play a predominant role in the recent residential property price dynamics.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Chryso Aristidou & George Thucydides, 2024. "Historical decomposition of the Cyprus Residential Property Prices," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 18(1), pages 53-70, July.
    • Handle: RePEc:erc:cypepr:v:18:y:2024:i:1:p:53-70
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    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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