East, West, Boom & Bust: The Spread of House Prices & Rents in Ireland, 2007-2012

Abstract:     
Property prices in the Republic of Ireland fell by half between 2007 and 2012 on average, but little is known yet about how price falls differed across property type and location. This paper examines this issue, using a dataset of over one million property listings to calculate 2007 and 2012 prices for a set of standardised properties for over 1,100 sales regions and 312 lettings regions. It finds four stylised facts about the distribution of house prices and rents in Ireland during this period. Firstly, the spread of prices across different property sizes increased significantly in the crash. This is consistent with a "property ladder" effect during the bubble temporarily pushing up the relative price of smaller properties. Secondly and conversely, the spread of rents from largest to smallest property sizes fell between bubble and crash. Thirdly, there was at most a small fall in the spread of both prices and rents across space. Lastly, in both bubble and crash periods, the spread of rents was constrained relative to the spread of prices, particularly in the upper tail, a finding suggestive of renter search thresholds.

Number of Pages in PDF File: 35

Keywords: Housing Markets, Housing Prices, Hedonic Regression, market cycles

JEL Classification: R31, G12, H4, L92, E32

working papers series