Working Paper: A regional model of the Danish housing market

Working Paper - November 2017 - No. 121

Authors Hviid, Simon Juul
Subject Financial stability; Other economic analyses; Housing Market, Home Financing; Models
Type Working paper
Year 2017
Published 9 November 2017
Abstract icon In this paper, we investigate the geographical connection of the housing market. We estimate a regional model of single-family house prices and show that regions are connected via the relative prices, giving rise to a ripple effect – when house prices increase in one area, part of the housing demand is shifted to other areas. At the same time, we find that house prices are more sensitive to the development of fundamental factors, such as income and interest rates in Copenhagen, and that the ripple effect is stronger from Copenhagen to the rest of Denmark than in the opposite direction.