Series: Working Papers. 2205.
Author: Corinna Ghirelli, Danilo Leiva-León and Alberto Urtasun.
Published in: SERIEs-Journal of the Spanish Economic Association, Volume 14, Issue 2, June 2023, pp 165-187
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Abstract
In this article, we measure changes over time in the synchronization of housing price cycles across Spanish cities. In doing so, we rely on a regime-switching framework that identifies the housing price cycles of pairs of cities, and simultaneously infers the evolving relation between those cycles. These bilateral relationships are then summarized into an aggregate synchronization index of city-level housing cycles. The estimates suggest that Spanish housing prices have followed a convergence pattern, which picked in 2009 and slightly decreased afterwards. We also identify the cities that have been the main contributors to this convergence process. Moreover, we show that differences in population growth and economic structure are key factors to explain the evolution of housing price synchronization among Spanish cities.