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Housing Supply and Price Reactions: A Comparison Approach to Spanish and Italian Markets

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  • Paloma Taltavull de La Paz
  • Laura Gabrielli

Abstract

Italian and Spanish property markets have experienced a sustained period of growth since the mid-1990s until 2008 when both markets fell into rapid decline due to the worldwide Financial Economic Crisis (FEC). Although the economic impact of the FEC was similar, each country experienced different reactions in its respective real estate market, changes on house prices, building constructions or planning regulations. This paper presents a new supply equation for Italian and Spanish regional markets. A pool of EGLS/IV Two-Step GLS methods are used to account for cross-sectional heteroskedasticity with fixed effects in order to control space differences. The analysis has been developed at a regional level, and shows the variation in the responsiveness of the new housing supply to prices by region. The results show long-term price supply elasticity by regions, and the negative impact of exogenous shock. They also suggest that house markets follow similar patterns in several regions with elastics responses in most territories and stronger negative impact of credit crunch in Spanish than Italian housing development.

Suggested Citation

  • Paloma Taltavull de La Paz & Laura Gabrielli, 2015. "Housing Supply and Price Reactions: A Comparison Approach to Spanish and Italian Markets," Housing Studies, Taylor & Francis Journals, vol. 30(7), pages 1036-1063, October.
    • Handle: RePEc:taf:chosxx:v:30:y:2015:i:7:p:1036-1063
    DOI: 10.1080/02673037.2015.1006183
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    References listed on IDEAS

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    1. Nobili, Andrea & Zollino, Francesco, 2017. "A structural model for the housing and credit market in Italy," Journal of Housing Economics, Elsevier, vol. 36(C), pages 73-87.
    2. Arnott, Richard, 1987. "Economic theory and housing," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 24, pages 959-988, Elsevier.
    3. Olsen, Edgar O., 1987. "The demand and supply of housing service: A critical survey of the empirical literature," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 25, pages 989-1022, Elsevier.
    4. Quigley, John M. & Raphael, Steven & Rosenthal, Larry A., 2008. "Measuring Land-Use Regulations and Their Effects in the Housing Market," Berkeley Program on Housing and Urban Policy, Working Paper Series qt07t5d0q4, Berkeley Program on Housing and Urban Policy.
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    Cited by:

    1. Torres-Tellez, Jonathan & Montero Soler, Alberto, 2021. "El precio de la vivienda en España tras el inicio de la crisis económica: un análisis empírico || Housing prices in Spain after the beginning of the financial crisis: An empirical analysis," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 32(1), pages 376-391, December.
    2. Vinci, Sabato & Bartolacci, Francesca & Salvia, Rosanna & Salvati, Luca, 2022. "Housing markets, the great crisis, and metropolitan gradients: Insights from Greece, 2000–2014," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).
    3. Massimo Cecchini & Ilaria Zambon & Luca Salvati, 2019. "Housing and the City: A Spatial Analysis of Residential Building Activity and the Socio-Demographic Background in a Mediterranean City, 1990–2017," Sustainability, MDPI, vol. 11(2), pages 1-23, January.
    4. Elena IONAȘCU, 2019. "The Dynamic Relationship Between The Residential Real Estate Markets, Macro – Economy And Institutional Development: Evidence From Eu Countries," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 6, pages 75-107.
    5. IKM Mokhtarul Wadud & Omar H. M. N. Bashar & Huson Joher Ali Ahmed & William Dimovski, 2022. "Property price dynamics and asymmetric effects of economic policy uncertainty: New evidence from the Australian capital cities," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4359-4380, December.
    6. Marilena Mironiuc & Elena Ionașcu & Maria Carmen Huian & Alina Țaran, 2021. "Reflecting the Sustainability Dimensions on the Residential Real Estate Prices," Sustainability, MDPI, vol. 13(5), pages 1-28, March.
    7. Paloma Taltavull de La Paz, 2021. "Predicting housing prices. A long term housing price path for Spanish regions," LARES lares-2021-4dra, Latin American Real Estate Society (LARES).
    8. Tomao, Antonio & Quaranta, Giovanni & Salvia, Rosanna & Vinci, Sabato & Salvati, Luca, 2021. "Revisiting the ‘southern mood’? Post-crisis Mediterranean urbanities between economic downturns and land-use change," Land Use Policy, Elsevier, vol. 111(C).
    9. Marco Zitti & Luca Salvati, 2017. "Recession and value of new dwellings: Changes in the spatial structure of Greece, 2003-2015," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 7(2), pages 1313-1313.
    10. Raya, Josep Maria & Torres-Pruñonosa, Jose, 2022. "The importance of administrative data in the evaluation of the incidence of social housing allowance programmes," Evaluation and Program Planning, Elsevier, vol. 94(C).
    11. Jose Torres-Pruñonosa & Pablo García-Estévez & Camilo Prado-Román, 2021. "Artificial Neural Network, Quantile and Semi-Log Regression Modelling of Mass Appraisal in Housing," Mathematics, MDPI, vol. 9(7), pages 1-16, April.

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