Regional Housing Market Conditions in Spain

30 Pages Posted: 7 Jan 2021

See all articles by Alessandro Galesi

Alessandro Galesi

idealista

Nuria Mata

affiliation not provided to SSRN

David Rey

idealista

Sebastian Schmitz

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN)

Johannes Schuffels

Maastricht University - School of Business and Economics

Date Written: November 3, 2020

Abstract

Selling homes is not easy. Home sellers usually need to apply a price discount to swiftly close a deal, and more so when housing market activity is low. Using detailed data on home listings and transactions in Spain, we provide unique estimates of the price discount across regional submarkets and time. We document that the price discount is strongly countercylical, as it increases with declining market conditions, and viceversa during upturns. Despite substantial heterogeneity, regional price discounts are synchronized and a single common factor can account for about sixty percent of their variation, thus suggesting the existence of a national housing cycle. Finally, we document that the main factors linked to changes in the price discount are developments in income, population, and interest rates, which are jointly able to explain the bulk of variation in housing market liquidity across regions and time. Besides providing a formal test of the performance of the price spread in gauging housing market liquidity, this study conveys practical information to real estate market participants, policymakers, and financial institutions for which assessing conditions in Spanish housing markets is a central task.

Keywords: Housing Market, Asking Price, Price Discount, Market Tightness

JEL Classification: R20, R30, R32

Suggested Citation

Galesi, Alessandro and Mata, Nuria and Rey, David and Schmitz, Sebastian and Schuffels, Johannes, Regional Housing Market Conditions in Spain (November 3, 2020). Available at SSRN: https://ssrn.com/abstract=3724178 or http://dx.doi.org/10.2139/ssrn.3724178

Alessandro Galesi (Contact Author)

idealista ( email )

Madrid, Madrid 28014
Spain

Nuria Mata

affiliation not provided to SSRN

David Rey

idealista ( email )

Madrid 28014
Spain

Sebastian Schmitz

European Union - Directorate General for Economic and Financial Affairs (DG ECFIN) ( email )

BU-1 05/190
Brussels, Bruxelles B-1049
Belgium

Johannes Schuffels

Maastricht University - School of Business and Economics ( email )

Netherlands

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