IDEAS home Printed from https://ideas.repec.org/a/sae/toueco/v22y2016i5p964-978.html
   My bibliography  Save this article

Tourism and house prices in Italy

Author

Listed:
  • Bianca Biagi

    (University of Sassari and CRENoS, Italy)

  • Maria Giovanna Brandano

    (University of Sassari and CRENoS, Italy)

  • Steven B. Caudill

    (Florida Atlantic University, USA; University of Sassari and CRENoS, Italy)

Abstract

Evaluating the impact of tourism on housing prices is an important endeavor, but the usual empirical approach is to estimate a single regression model with house price as a function of tourism and other variables. This approach does not allow for individual heterogeneity. In this article, the authors apply a latent class model to estimate the impact of tourism activities on housing prices in Italy. In particular, they allow for three different unobservable classes or regimes, permitting the impact of tourism on house prices to differ across classes. In other words, they allow for unobservable heterogeneity. The empirical results do support the existence of three classes of house price regressions. Using two different indices of tourism activity, for certain cities (about 21–48% of the sample), increases in tourism activity increase housing prices and for other cities (8–17%) increases in tourism activity decreases housing prices. For approximately half of the sample, increases in tourism activity have no impact on housing prices.

Suggested Citation

  • Bianca Biagi & Maria Giovanna Brandano & Steven B. Caudill, 2016. "Tourism and house prices in Italy," Tourism Economics, , vol. 22(5), pages 964-978, October.
  • Handle: RePEc:sae:toueco:v:22:y:2016:i:5:p:964-978
    DOI: 10.5367/te.2015.0470
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5367/te.2015.0470
    Download Restriction: no

    File URL: https://libkey.io/10.5367/te.2015.0470?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Tiziana Caliman, 2009. "The risk of falling house prices in Italy," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 56(4), pages 401-423, December.
    2. Beard, T. Randolph & Caudill, Steven B. & Gropper, Daniel M., 1997. "The diffusion of production processes in the U.S. banking industry: A finite mixture approach," Journal of Banking & Finance, Elsevier, vol. 21(5), pages 721-740, May.
    3. Steven B. Caudill & Daniel M. Gropper & Valentina Hartarska, 2009. "Which Microfinance Institutions Are Becoming More Cost Effective with Time? Evidence from a Mixture Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(4), pages 651-672, June.
    4. Chieh-hsuan Wang & Chien-ping Chung & Jen-Te Hwang, 2012. "Hedonic and GMM Estimates of the Relationship between House Prices and Rents in Taiwan," Economics Bulletin, AccessEcon, vol. 32(3), pages 2231-2245.
    5. Muellbauer, John & Murphy, Anthony, 1997. "Booms and Busts in the UK Housing Market," Economic Journal, Royal Economic Society, vol. 107(445), pages 1701-1727, November.
    6. Fabio Cerina, 2007. "Tourism Specialization and Environmental Sustainability in a Dynamic Economy," Tourism Economics, , vol. 13(4), pages 553-582, December.
    7. Bianca Biagi & Maria G. Brandano & Dionysia Lambiri, 2015. "Does Tourism Affect House Prices? Evidence from Italy," Growth and Change, Wiley Blackwell, vol. 46(3), pages 501-528, September.
    8. Hamilton, Jacqueline M., 2007. "Coastal landscape and the hedonic price of accommodation," Ecological Economics, Elsevier, vol. 62(3-4), pages 594-602, May.
    9. Sheng, Li, 2011. "Specialisation versus diversification: A simple model for tourist cities," Tourism Management, Elsevier, vol. 32(5), pages 1229-1231.
    10. Tiziana Caliman & Enrico di Bella, 2011. "Spatial Autoregressive Models for House Price Dynamics in Italy," Economics Bulletin, AccessEcon, vol. 31(2), pages 1837-1855.
    11. Do, A Quang & Grudnitski, Gary, 1995. "Golf Courses and Residential House Prices: An Empirical Examination," The Journal of Real Estate Finance and Economics, Springer, vol. 10(3), pages 261-270, May.
    12. Simon Stevenson, 2008. "Modeling Housing Market Fundamentals: Empirical Evidence of Extreme Market Conditions," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(1), pages 1-29, March.
    13. Isabel Vanslembrouck & Guido Van Huylenbroeck & J. Van Meensel, 2005. "Impact of Agriculture on Rural Tourism: A Hedonic Pricing Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(1), pages 17-30, March.
    14. Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
    15. Malpezzi, Stephen, 1999. "A Simple Error Correction Model of House Prices," Journal of Housing Economics, Elsevier, vol. 8(1), pages 27-62, March.
    16. Laura O. Taylor & V. Kerry Smith, 2000. "Environmental Amenities as a Source of Market Power," Land Economics, University of Wisconsin Press, vol. 76(4), pages 550-568.
    17. J.M. Espinet & M. Saez & G. Coenders & M. FluviÃ, 2003. "Effect on Prices of the Attributes of Holiday Hotels: A Hedonic Prices Approach," Tourism Economics, , vol. 9(2), pages 165-177, June.
    18. Daniel Gropper & Steven Caudill & T. Beard, 1999. "Estimating Multiproduct Cost Functions Over Time Using a Mixture of Normals," Journal of Productivity Analysis, Springer, vol. 11(3), pages 201-218, June.
    19. Philippe Le Goffe, 2000. "Hedonic pricing of agriculture and forestry externalities," Post-Print hal-02364341, HAL.
    20. Steven B. Caudill & James E. Long & Franklin G. Mixon, 2012. "Female athletic participation and income: evidence from a latent class model," Journal of Applied Statistics, Taylor & Francis Journals, vol. 39(3), pages 477-488, June.
    21. Anderson, Soren T. & West, Sarah E., 2006. "Open space, residential property values, and spatial context," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 773-789, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bianca Biagi & Maria G. Brandano & Dionysia Lambiri, 2015. "Does Tourism Affect House Prices? Evidence from Italy," Growth and Change, Wiley Blackwell, vol. 46(3), pages 501-528, September.
    2. B. Biagi & MG. Brandano & D. Lambiri, 2012. "Does tourism affect house prices? Some evidence from Italy," Working Paper CRENoS 201227, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    3. Arno Vlist & Daniel Czamanski & Henk Folmer, 2011. "Immigration and urban housing market dynamics: the case of Haifa," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(3), pages 585-598, December.
    4. François Ortalo-Magné & Sven Rady, 2006. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints ," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 459-485.
    5. Celia Bilbao-Terol & Verónica Cañal-Fernández & Luis Valdés & Eduardo Del Valle, 2017. "Rural Tourism Accommodation Prices by Land Use-Based Hedonic Approach: First Results from the Case Study of the Self-Catering Cottages in Asturias," Sustainability, MDPI, Open Access Journal, vol. 9(10), pages 1-17, September.
    6. Carr-Harris, Andrew & Lang, Corey, 2019. "Sustainability and tourism: the effect of the United States’ first offshore wind farm on the vacation rental market," Resource and Energy Economics, Elsevier, vol. 57(C), pages 51-67.
    7. Mikulić, Josip & Vizek, Maruska & Stojcic, Nebojsa & Payne, James E. & Čeh Časni, Anita & Barbić, Tajana, 2021. "The Effect of Tourism Activity on Housing Affordability," MPRA Paper 108688, University Library of Munich, Germany.
    8. Constantinescu, Mihnea & Lastauskas, Povilas, 2018. "The knotty interplay between credit and housing," The Quarterly Review of Economics and Finance, Elsevier, vol. 70(C), pages 241-266.
    9. Bilbao-Terol , Celia & Valdés , Luis, 2015. "The environmental setting, farming activities and rural accommodation prices," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 33, pages 33-51.
    10. Ghysels, Eric & Plazzi, Alberto & Valkanov, Rossen & Torous, Walter, 2013. "Forecasting Real Estate Prices," Handbook of Economic Forecasting, in: G. Elliott & C. Granger & A. Timmermann (ed.), Handbook of Economic Forecasting, edition 1, volume 2, chapter 0, pages 509-580, Elsevier.
    11. Zhao, Qingbin & Li, Guoqiang & Gu, Xinhua & Lei, Chun Kwok, 2021. "Inequality hikes, saving surges, and housing bubbles," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 349-363.
    12. Muñoz, Sònia, 2004. "Real effects of regional house prices: dynamic panel estimation with heterogeneity," LSE Research Online Documents on Economics 24704, London School of Economics and Political Science, LSE Library.
    13. L. Rachel Ngai & Silvana Tenreyro, 2014. "Hot and Cold Seasons in the Housing Market," American Economic Review, American Economic Association, vol. 104(12), pages 3991-4026, December.
    14. Visar Hoxha & Alenka Temeljotov Salaj, 2014. "Fundamental Economic Factors That Affect Housing Prices: Comparative Analysis between Kosovo and Slovenia," Management, University of Primorska, Faculty of Management Koper, vol. 9(4), pages 323-348.
    15. Luc Laeven & Alexander Popov, 2017. "Waking Up from the American Dream: On the Experience of Young Americans during the Housing Boom of the 2000s," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 49(5), pages 861-895, August.
    16. Fabozzi, Frank J. & Xiao, Keli, 2017. "Explosive rents: The real estate market dynamics in exuberance," The Quarterly Review of Economics and Finance, Elsevier, vol. 66(C), pages 100-107.
    17. Canepa, Alessandra & Zanetti Chini, Emilio & Alqaralleh, Huthaifa, 2019. "Modelling Housing Market Cycles in Global Cities," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201901, University of Turin.
    18. Loïc Lévi & Jean Jacques Nowak & Sylvain Petit & Hakim Hammadou, 2020. "Industrial legacy and hotel pricing: An application of spatial hedonic pricing analysis in Nord-Pas-de-Calais, France," Post-Print hal-03065276, HAL.
    19. Duca, John V. & Muellbauer, John & Murphy, Anthony, 2010. "Housing markets and the financial crisis of 2007-2009: Lessons for the future," Journal of Financial Stability, Elsevier, vol. 6(4), pages 203-217, December.
    20. Woo Gon Kim & Jun (Justin) Li & Jin Soo Han & Yunkyong Kim, 2017. "The influence of recent hotel amenities and green practices on guests’ price premium and revisit intention," Tourism Economics, , vol. 23(3), pages 577-593, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:toueco:v:22:y:2016:i:5:p:964-978. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.