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Housing prices in Spain: convergence or decoupling?

Author

Listed:
  • Corinna Ghirelli

    (Banco de España)

  • Danilo Leiva-León

    (Banco de España)

  • Alberto Urtasun

    (Banco de España)

Abstract

In this article, we measure changes over time in the synchronization of housing price cycles across Spanish cities. In doing so, we rely on a regime-switching framework that identifies the housing price cycles of pairs of cities, and simultaneously infers the evolving relation between those cycles. These bilateral relationships are then summarized into an aggregate synchronization index of city-level housing cycles. The estimates suggest that Spanish housing prices have followed a convergence pattern, which picked in 2009 and slightly decreased afterwards. We also identify the cities that have been the main contributors to this convergence process. Moreover, we show that differences in population growth and economic structure are key factors to explain the evolution of housing price synchronization among Spanish cities.

Suggested Citation

  • Corinna Ghirelli & Danilo Leiva-León & Alberto Urtasun, 2022. "Housing prices in Spain: convergence or decoupling?," Working Papers 2205, Banco de España.
    • Handle: RePEc:bde:wpaper:2205
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    References listed on IDEAS

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    Cited by:

    1. Dettoni, Robinson & Gil-Alana, Luis Alberiko, 2023. "Testing the hypothesis of duration dependence in the U.S. housing market," Finance Research Letters, Elsevier, vol. 58(PD).

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    More about this item

    Keywords

    housing cycles; synchronization; Spain;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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