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Price signals in illiquid markets:The case of residential property in Ireland, 2006-2012

Author

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  • Ronan C. Lyons

    (Department of Economics, Trinity College Dublin)

Abstract

How do list and sale prices relate to each other over the market cycle? Using a dataset of over 650,000 Irish property listings and transactions between 2006 and 2012, this research examines the relationship between list and sale prices. It applies hedonic methods and exploits information on time-to-sell and time-to-drawdown to decompose the gap between list and sale prices into four spreads: the selection spread, capturing the price difference between properties that sell and all listings; the matching spread, which reflects time-to-sell and is countercyclical; the drawdown spread, reflecting administrative costs; and the counteroffer spread, which is the closest counterpart to a bid-ask spread in the housing market and is procyclical.

Suggested Citation

  • Ronan C. Lyons, 2013. "Price signals in illiquid markets:The case of residential property in Ireland, 2006-2012," Trinity Economics Papers tep0613, Trinity College Dublin, Department of Economics.
  • Handle: RePEc:tcd:tcduee:tep0613
    as

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    File URL: http://www.tcd.ie/Economics/TEP/2013/TEP0613.pdf
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    References listed on IDEAS

    as
    1. Ronan C. Lyons, 2015. "East, west, boom and bust: the spread of house prices and rents in Ireland, 2007-2012," Journal of Property Research, Taylor & Francis Journals, vol. 32(1), pages 77-101, March.
    2. Kennedy, Gerard & McIndoe-Calder, Tara, 2012. "The Irish Mortgage Market: Stylised Facts, Negative Equity and Arrears," Quarterly Bulletin Articles, Central Bank of Ireland, pages 85-108, February.
    3. Steven C. Bourassa & Martin Hoesli & Donato Scognamiglio & Philippe Sormani, 2008. "Constant-Quality House Price Indexes for Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(IV), pages 561-575, December.
    4. J. R. Knight & Jonathan Dombrow & C. F. Sirmans, 1995. "A Varying Parameters Approach to Constructing House Price Indexes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 23(2), pages 187-205, June.
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    Cited by:

    1. Agnew, Kerri & Lyons, Ronan C., 2018. "The impact of employment on housing prices: Detailed evidence from FDI in Ireland," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 174-189.
    2. Ronan C. Lyons, 2015. "East, west, boom and bust: the spread of house prices and rents in Ireland, 2007-2012," Journal of Property Research, Taylor & Francis Journals, vol. 32(1), pages 77-101, March.
    3. Mense, Andreas & Michelsen, Claus & Cholodilin, Konstantin A., 2017. "Empirics on the causal effects of rent control in Germany," FAU Discussion Papers in Economics 24/2017, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    4. Ronan Lyons, 2012. "Search costs, sorting and “property ladder†effects: Evidence from the valuation of amenities," ERSA conference papers ersa12p511, European Regional Science Association.

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    More about this item

    Keywords

    Housing markets; Search and match; Valuation accuracy;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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