An Empirical Investigation of the Portuguese Housing Prices (2004-18)
DOI:
https://doi.org/10.6000/1929-7092.2020.09.06Keywords:
Housing Prices, Housing market, Real estate, Portugal.Abstract
This article presents an integrated macro view of the Portuguese housing market with macroeconomic indicators. Firstly, it compares the housing market and several macroeconomic indicators from 2004 to 2018. Then, the dynamic analysis of the housing prices by different regions in Portugal and its typology included. Also, the article is complemented with the regression analysis to identify the relationship between the house prices and macroeconomic indicators.
Results show that the current negative interest rates are increasing the demand for houses and the housing prices. The housing stock in Portugal is mostly fixed but may experience limited growth as the rebuild program and new constructions. GDP and the housing prices have a positive correlation. Houses in Algarve and Lisbon are markedly more expensive than in the interior. From the regression analysis, the unemployment rate is the closest correlated variable.
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Lee, Chyi Lin. 2009. Housing price volatility and its determinants. International Journal of Housing Markets and Analysis, 2(3):293-308.
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https://doi.org/10.1016/0094-1190(80)90055-8
Long-term interest rates (indicator). OECD (2018). Accessed on 06-October-2018.
https://doi.org/10.1787/662d712c-en
Lourenço, Rita Fradique, and Paulo M.M. Rodrigues. 2014. The dynamics and contrast of house prices in Portugal and Spain. Economic Bulletin and Financial Stability Report Articles, 39-52
Louren.o, Rita Fradique, and Paulo M.M. Rodrigues. 2017. House prices: Bubbles, exuberance or something else? Evidence from euro area countries. Working papers no. w201517, Banco de Portugal, Economics and Research Department.
Mankiw N. Gregory, 2016a. Case study the financial crisis and great recession of 2008-2009 in Macroeconomics. (9th ed.): 357-359. New York: Worth Publishers.
Mankiw N. Gregory, 2016b. The theory of Investment in Macroeconomics. (9th ed.): 507. New York: Worth Publishers.
Matos, Fátima Loureiro De. 2009. Housing conditions in Portugal. Bulletin of Geography. Socio-economic series, 11(11): 49-60.
https://doi.org/10.2478/v10089-008-0020-8
Matos, Fátima Loureiro De. 2012. Recent dynamics in the Portuguese housing market as compared with the European Union. Bulletin of Geography. Socio-economic Series, 18(18): 69-84.
https://doi.org/10.2478/v10089-012-0020-6
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Mishkin, Frederic S. 2011. Over the cliff: From the subprime to the global financial crisis. Journal of Economic Perspectives, 25(1): 49-70.
https://doi.org/10.1257/jep.25.1.49
Moreira, António Carrizo, Fernando Oliveira Tavares, and Elisabeth T. Pereira. 2016. Rental income and cap rates a comparison of the Lisbon and Porto housing markets. Journal of Urban and Regional Analysis, 8(2): 179-202.
Net national income. OECD (2018). Accessed on 06 October 2018.
https://doi.org/10.1787/af9be38a-en
Nijkamp, Peter, Piet Rietveld and Folke Snickars. (Ed.). 1987. Handbook of regional and urban economics, vol. 1. North-Holland, New York.
Oikarinen, Elias. 2014. Studies on housing price dynamics. Unpublished doctoral dissertation, Turku School of Economics.
Olmo Jorge Chica. 2007. Prediction of housing location price by a multivariate spatial method: Cokriging. Journal of Real Estate Research, 29(1): 91-114.
Oswald, Andrew. 1999. The housing market and Europe’s unemployment: A non-technical paper in Homeownership and the Labour Market in Europe: 43. Oxford University Press.
Pagourtzi, Elli, Vassilis Assimakopoulos, Thomas Hatzichristos, and Nick French. 2003. Real estate appraisal: a review of valuation methods. Journal of Property Investment & Finance, 21(4): 383-401.
https://doi.org/10.1108/14635780310483656
Pinto, Teresa Costa. 2012. Patterns of housing demand under uncertainty: A case study in Lisbon. CIDADES, Comunidades e Territórios, 21-35.
Ridker, Ronald G., and John A. Henning. 1967. The determinants of residential property values with special reference to air pollution, Review of Economics and Statistics, 49(2): 246-257.
https://doi.org/10.2307/1928231
Rodrigues, Paulo. M. M., and Rita Fradique Lourenço. 2017. House prices in Portugal-what happened since the crisis? Economic Bulletin and Financial Stability Report Articles.
Short-term interest rates (indicator). OECD (2018). Accessed on 06-October-2018.
https://doi.org/10.1787/2cc37d77-en
Straszheim, Mahlon R. 1973. Estimation of the demand for urban housing services from household interview data, The Review of Economics and Statistics, 55(1): 1-8.
https://doi.org/10.2307/1927988
Sutton, Gregory D., Dubravko Mihaljek, and Agne Subelyte. 2017. Interest rates and house prices in the United States and around the world. Working Paper no.665. Bank for International Settlements.
Tavares, Fernando A. Oliveira de, Moreira António Carrizo, and Pereira, Elisabeth T. 2012a. Assimetria de informação no mercado imobiliário: uma revisão da literatura. Revista universo contábil, 8(2): 146-164.
https://doi.org/10.4270/ruc.2012218
Tavares, Fernando A. Oliveira de, Moreira António Carrizo, and Pereira, Elisabeth T. 2012b. Avaliação imobiliária. Dois casos da importância das vistas como externalidades. Revista Portuguesa e brasileira de gestão, 11(4): 2-13.
Tavares, Fernando A. Oliveira de, Moreira António Carrizo, and Pereira, Elisabeth T. 2014. The Portuguese residential real estate market. An evaluation of the last decade. Panoeconomicus, 61(6): 739–757.
https://doi.org/10.2298/PAN1406739T
Trojanek, Maria. 2010. The application of income approach in property valuation in Poland. Economics & Sociology, 38(2): 35-47.
https://doi.org/10.14254/2071-789X.2010/3-2/4
Tsatsaronis, Kostas, and Haibin Zhu. 2004. What drives housing price dynamics: Cross-country evidence. BIS Quarterly Review, March
https://doi.org/10.1108/14635780510599467
Adams, Zeno, and Roland Füss. 2010. Macroeconomic determinants of international housing markets. Journal of Housing Economics. 19(1): 38-50.
https://doi.org/10.1016/j.jhe.2009.10.005
Agnello, Luca, Vitor Castro, and Ricardo M. Sousa. 2018. Systemic financial crises and the housing market cycle. Applied Economics Letters. 25(10): 724-729.
https://doi.org/10.1080/13504851.2017.1361001
Álvarez, Luis J. and Alberto Cabrero. 2010. Does Housing Really Lead the Business Cycle in Spain? In Housing Markets in Europe: 61-84. Berlin: Springer.
https://doi.org/10.1007/978-3-642-15340-2_4
Andrews Dan. 2010. Real house prices in OECD countries: The role of demand shocks and structural and policy factors. OECD Economics Department Working Papers no. 831, OECD Publishing, France.
Baily, Martin Neil, and Douglas J. Elliott. 2009. The US financial and economic crisis: Where does it stand and where do we go from here. Initiative on Business and Public Policy at Brookings Institution.
Barda, Constantia, and Eleni Sardianou. 2010. Analysing consumers' ‘activism’ in response to rising prices. International Journal of Consumer Studies, 34(2): 133-139.
https://doi.org/10.1111/j.1470-6431.2009.00832.x
Butler, Richard V. 1980. Cross-sectional variation in the hedonic relationship for urban housing markets. Journal of Regional Science 20(4): 439-453.
https://doi.org/10.1111/j.1467-9787.1980.tb00661.x
Castro, Conceição. 2016. The impact of the great recession and Eurozone debt crises on Portuguese tourism. European Journal of Applied Business and Management, 2(1): 97-116.
Cheshire, Paul, and Edwin S. Mills (Eds.). 1999. Handbook of re-gional and urban economics, vol.3. North-Holland, New York.
Constantinides, George M., Milton Harris, and René M. Stulz. (Ed.). 2003. Handbook of the economics of finance, vols. 1A-B. North-Holland, New York.
Covitz, Daniel, Nellie Liang and Gustavo A. Suarez. 2013. The evolution of a financial crisis: Collapse of the asset?backed commercial paper market. The Journal of Finance, 68(3): 815-848.
https://doi.org/10.1111/jofi.12023
Davis, Morris A., and Jonathan Heathcote. 2005. Housing and the Business Cycle. International Economic Review, 46(3): 751-784.
https://doi.org/10.1111/j.1468-2354.2005.00345.x
Engle, Robert F., David M. Lilien, M., and Mark Watson. 1985. A dymimic model of housing price determination. Journal of Econometrics, 28(3): 307-326.
https://doi.org/10.1016/0304-4076(85)90003-X
Ferreira, Fernando A., and Marjan S. Jalali. 2015. Identifying key determinants of housing sales and time-on-the-market (TOM) using fuzzy cognitive mapping. International Journal of Strategic Property Management, 19(3): 235–244.
https://doi.org/10.3846/1648715X.2015.1052587
Fisher, Irving. 1933. The debt-deflation theory of great depressions. Econometrica: Journal of the Econometric Society, 1(4): 337–357.
https://doi.org/10.2307/1907327
Goodhart, Charles, and Boris Hofmann. 2008. House prices, money, credit, and the macroeconomy. Oxford Review of Economic Policy 24(1): 180-205.
https://doi.org/10.1093/oxrep/grn009
Greiber Claus, and Ralph Setzer. 2007. Money and housing, evidence for the euro area and the US. Discussion Paper Series 1 no.12, Deutsche Bundesbank.
Grether, David M. and Peter Mieszkowski. 1974. Determinants of real estate values. Journal of Urban Economics 1(2): 127-145.
https://doi.org/10.1016/0094-1190(74)90013-8
Gross domestic product (GDP). OECD (2018). Accessed on 06-October-2018.
https://doi.org/10.1787/dc2f7aec-en
Harmonized index of consumer prices by Individual consumption by purpose Monthly. (Metadata, INE). https://www.ine.pt/ bddXplorer/htdocs/minfo.jsp?var_cd=0000106&lingua=EN. Accessed: 12-Sep-2018.
Helbling, Tomas and Marco E. Terrones. 2003. When bubbles burst. World Economic Outlook, 4(2): 61-94.
Henderson, J. Vernon., and Jacques François Thisse. 2004. Handbook of regional and urban economics, vol. 4. North-Holland, New York.
Household disposable income (indicator). OECD (2018). Accessed on 13-October-2018.
https://doi.org/10.1787/dd50eddd-en
Housing prices (indicator). OECD (2018). Accessed on 06-October-2018.
https://doi.org/10.1787/63008438-en
Inflation (CPI) (indicator). OECD (2018). Accessed on 10-October-2018.
https://doi.org/10.1787/eee82e6e-en
Investment (GFCF). OECD (2018). Accessed on 14 October 2018.
https://doi.org/10.1787/b6793677-en
Kuttner, Kenneth N., and Ilhyock Shim. 2016. Can non-interest rate policies stabilize housing markets? Evidence from a panel of 57 economies. Journal of Financial Stability, 26: 31-44.
https://doi.org/10.1016/j.jfs.2016.07.014
Leung, Charles. 2004. Macroeconomics and housing: A review of the literature. Journal of Housing Economics, 13(4): 249-267.
https://doi.org/10.1016/j.jhe.2004.09.002
Lee, Chyi Lin. 2009. Housing price volatility and its determinants. International Journal of Housing Markets and Analysis, 2(3):293-308.
https://doi.org/10.1108/17538270910977572
Licensed buildings by Geographic localization, Monthly. (Metadata, INE). https://www.ine.pt/bddXplorer/htdocs/minfo.jsp? var_cd=0001371&lingua=EN. Accessed: 13-Oct-2018.
Linneman, Peter. 1980. Some empirical results on the nature of the hedonic price function for the urban housing market. Journal of Urban Economics, 8(1): 47-68.
https://doi.org/10.1016/0094-1190(80)90055-8
Long-term interest rates (indicator). OECD (2018). Accessed on 06-October-2018.
https://doi.org/10.1787/662d712c-en
Lourenço, Rita Fradique, and Paulo M.M. Rodrigues. 2014. The dynamics and contrast of house prices in Portugal and Spain. Economic Bulletin and Financial Stability Report Articles, 39-52
Louren.o, Rita Fradique, and Paulo M.M. Rodrigues. 2017. House prices: Bubbles, exuberance or something else? Evidence from euro area countries. Working papers no. w201517, Banco de Portugal, Economics and Research Department.
Mankiw N. Gregory, 2016a. Case study the financial crisis and great recession of 2008-2009 in Macroeconomics. (9th ed.): 357-359. New York: Worth Publishers.
Mankiw N. Gregory, 2016b. The theory of Investment in Macroeconomics. (9th ed.): 507. New York: Worth Publishers.
Matos, Fátima Loureiro De. 2009. Housing conditions in Portugal. Bulletin of Geography. Socio-economic series, 11(11): 49-60.
https://doi.org/10.2478/v10089-008-0020-8
Matos, Fátima Loureiro De. 2012. Recent dynamics in the Portuguese housing market as compared with the European Union. Bulletin of Geography. Socio-economic Series, 18(18): 69-84.
https://doi.org/10.2478/v10089-012-0020-6
Metadata Instituto Nacional de Estatística Statistics Portugal (Metadata, INE). https://www.ine.pt/bddXplorer/htdocs/minfo. jsp?var_cd=0001076&lingua=EN. Accessed: 03-Oct-2018.
Mills, Edwin S. (Ed.). 1987. Handbook of regional and urban economics, vol. 2. North-Holland, New York.
Mishkin, Frederic S. 2011. Over the cliff: From the subprime to the global financial crisis. Journal of Economic Perspectives, 25(1): 49-70.
https://doi.org/10.1257/jep.25.1.49
Moreira, António Carrizo, Fernando Oliveira Tavares, and Elisabeth T. Pereira. 2016. Rental income and cap rates a comparison of the Lisbon and Porto housing markets. Journal of Urban and Regional Analysis, 8(2): 179-202.
Net national income. OECD (2018). Accessed on 06 October 2018.
https://doi.org/10.1787/af9be38a-en
Nijkamp, Peter, Piet Rietveld and Folke Snickars. (Ed.). 1987. Handbook of regional and urban economics, vol. 1. North-Holland, New York.
Oikarinen, Elias. 2014. Studies on housing price dynamics. Unpublished doctoral dissertation, Turku School of Economics.
Olmo Jorge Chica. 2007. Prediction of housing location price by a multivariate spatial method: Cokriging. Journal of Real Estate Research, 29(1): 91-114.
Oswald, Andrew. 1999. The housing market and Europe’s unemployment: A non-technical paper in Homeownership and the Labour Market in Europe: 43. Oxford University Press.
Pagourtzi, Elli, Vassilis Assimakopoulos, Thomas Hatzichristos, and Nick French. 2003. Real estate appraisal: a review of valuation methods. Journal of Property Investment & Finance, 21(4): 383-401.
https://doi.org/10.1108/14635780310483656
Pinto, Teresa Costa. 2012. Patterns of housing demand under uncertainty: A case study in Lisbon. CIDADES, Comunidades e Territórios, 21-35.
Ridker, Ronald G., and John A. Henning. 1967. The determinants of residential property values with special reference to air pollution, Review of Economics and Statistics, 49(2): 246-257.
https://doi.org/10.2307/1928231
Rodrigues, Paulo. M. M., and Rita Fradique Lourenço. 2017. House prices in Portugal-what happened since the crisis? Economic Bulletin and Financial Stability Report Articles.
Short-term interest rates (indicator). OECD (2018). Accessed on 06-October-2018.
https://doi.org/10.1787/2cc37d77-en
Straszheim, Mahlon R. 1973. Estimation of the demand for urban housing services from household interview data, The Review of Economics and Statistics, 55(1): 1-8.
https://doi.org/10.2307/1927988
Sutton, Gregory D., Dubravko Mihaljek, and Agne Subelyte. 2017. Interest rates and house prices in the United States and around the world. Working Paper no.665. Bank for International Settlements.
Tavares, Fernando A. Oliveira de, Moreira António Carrizo, and Pereira, Elisabeth T. 2012a. Assimetria de informação no mercado imobiliário: uma revisão da literatura. Revista universo contábil, 8(2): 146-164.
https://doi.org/10.4270/ruc.2012218
Tavares, Fernando A. Oliveira de, Moreira António Carrizo, and Pereira, Elisabeth T. 2012b. Avaliação imobiliária. Dois casos da importância das vistas como externalidades. Revista Portuguesa e brasileira de gestão, 11(4): 2-13.
Tavares, Fernando A. Oliveira de, Moreira António Carrizo, and Pereira, Elisabeth T. 2014. The Portuguese residential real estate market. An evaluation of the last decade. Panoeconomicus, 61(6): 739–757.
https://doi.org/10.2298/PAN1406739T
Trojanek, Maria. 2010. The application of income approach in property valuation in Poland. Economics & Sociology, 38(2): 35-47.
https://doi.org/10.14254/2071-789X.2010/3-2/4
Tsatsaronis, Kostas, and Haibin Zhu. 2004. What drives housing price dynamics: Cross-country evidence. BIS Quarterly Review, March
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Published
2020-01-29
How to Cite
Luo, J., Pereira, R., & Dias, Ãlvaro. (2020). An Empirical Investigation of the Portuguese Housing Prices (2004-18). Journal of Reviews on Global Economics, 9, 47–67. https://doi.org/10.6000/1929-7092.2020.09.06
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