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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
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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. 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.
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    Cited by:

    1. Ronan C. Lyons, 2013. "Inside a Bubble and Crash – Evidence from the Valuation of Amenities," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.

    More about this item

    Keywords

    Housing markets; Search and match; Valuation accuracy;

    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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