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A panel error correction approach to explore spatial correlation patterns of the dominant housing market in Australian capital cities

journal contribution
posted on 2013-01-01, 00:00 authored by Le MaLe Ma, Chunlu LiuChunlu Liu
Purpose - A panel error correction model has been developed to investigate the spatial correlation patterns among house prices. This paper aims to identify a dominant housing market in the ripple down process. Design/methodology/approach - Seemingly unrelated regression estimators are adapted to deal with the contemporary correlations and heterogeneity across cities. Impulse response functions are subsequently implemented to simulate the spatial correlation patterns. The newly developed approach is then applied to the Australian capital city house price indices. Findings - The results suggest that Melbourne should be recognised as the dominant housing market. Four levels were classified within the Australian house price interconnections, namely: Melbourne; Adelaide, Canberra, Perth and Sydney; Brisbane and Hobart; and Darwin. Originality/value - This research develops a panel regression framework in addressing the spatial correlation patterns of house prices across cities. The ripple-down process of house price dynamics across cities was explored by capturing both the contemporary correlations and heterogeneity, and by identifying the dominant housing market.

History

Journal

International journal of housing markets and analysis

Volume

6

Issue

4

Pagination

405 - 421

Publisher

Emerald Group Publishing

Location

Bingley, England

ISSN

1753-8270

eISSN

1753-8289

Language

eng

Publication classification

C1 Refereed article in a scholarly journal

Copyright notice

2013, Emerald Publishing Group

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