A Spatial Approach to Price Segmentation in Housing Markets
||Costello, Gregory J.
||A Spatial Approach to Price Segmentation in Housing Markets
||8th European Real Estate Society Conference (26-29 June 2001) Alicante, Spain
||This paper uses a large transaction data set from the city of Perth Western Australia to test empirically whether differentials exist in the patterns of information diffusion that operate for different price segments in housing markets. Whereas some previous studies have tested the influence of price segmentation within aggregate city-wide housing markets, these studies are limited in that they do not acknowledge the influence of important spatial sub-markets. More specifically if the aggregate city-wide housing market is segmented according to price then it is not clear whether observed differentials in price changes between price segments are due to specific price segment influences or specific spatial influences. This study employs Tukey’s honestly significance difference test to identify homogenous spatial price segments. The spatial groups are identified according to postal code district and individual real house price indices are constructed for individual spatial regions and larger homogenous groups. The indices are used in serial correlation tests. Initially price changes in homogenous price segments are regressed on lagged price changes for similar price segments in neighbouring spatial regions. These tests are also performed for a control group of homogenous price segments in non-neighbouring spatial regions. It is hoped that this methodology might establish whether price segment specific or location specific factors influence information diffusion processes within the housing market more heavily. Preliminary results indicate that information from past price changes appear to be more persistent in the cheaper price segments.
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||Housing prices Signals
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