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Explaining the spatial variation in housing prices: an economic geography approach

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  • Karolien De Bruyne
  • Jan Van Hove

Abstract

Housing prices vary geographically, even between neighbouring municipalities. Local differences can be attributed to differences in socio-economic variables and real estate characteristics. This article argues that one should additionally take into account the geographical location of municipalities. In particular, housing prices are affected by distance and travel-time to important economic centres offering jobs and extensive services. Following the economic geography literature, we develop a model showing the explicit impact of geographical barriers on housing prices. As such, we distinguish ourselves from the existing literature on the dynamics of housing prices since geographical elements are fairly constant over time. We estimate our model on municipality-level housing prices for all 589 Belgian municipalities in 2001. We also differentiate between the two main regions of Belgium (Flanders and Wallonia). Our empirical results confirm expectations. Geographical barriers have significantly negative effects on housing prices. Nevertheless we find important differences between the Belgian regions and the means of transport considered.

Suggested Citation

  • Karolien De Bruyne & Jan Van Hove, 2013. "Explaining the spatial variation in housing prices: an economic geography approach," Applied Economics, Taylor & Francis Journals, vol. 45(13), pages 1673-1689, May.
  • Handle: RePEc:taf:applec:45:y:2013:i:13:p:1673-1689
    DOI: 10.1080/00036846.2011.636021
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    Cited by:

    1. Vifill Karlsson, 2011. "The Relationship of Housing Prices and Transportation Improvements: Location and Marginal Impact," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(2), pages 223-241.
    2. Roel Helgers & Erik Buyst, 2016. "Spatial and Temporal Diffusion of Housing Prices in the Presence of a Linguistic Border: Evidence from Belgium," Spatial Economic Analysis, Taylor & Francis Journals, vol. 11(1), pages 92-122, March.
    3. Yunlong Gong & Peter Boelhouwer & Jan de Haan, 2016. "Interurban house price gradient: Effect of urban hierarchy distance on house prices," Urban Studies, Urban Studies Journal Limited, vol. 53(15), pages 3317-3335, November.
    4. Angelos Mimis & Antonis Rovolis & Marianthi Stamou, 2013. "Property valuation with artificial neural network: the case of Athens," Journal of Property Research, Taylor & Francis Journals, vol. 30(2), pages 128-143, June.
    5. Vifill KARLSSON, "undated". "Modern Industrial Structure and Development of House PriceÂ’s Spatial Disparity: A General Case for Iceland; a Large but Thinly Populated European Country," Regional and Urban Modeling 284100023, EcoMod.

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