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Is there long-run equilibrium in the house prices of Australian capital cities?

journal contribution
posted on 2015-01-01, 00:00 authored by Le MaLe Ma, Chunlu LiuChunlu Liu
In order to explore the long-run equilibrium in the house prices of different cities, studies on house price convergence have been conducted by a number of researchers. However, the majority of previous studies have neglected the effects of spatial heterogeneity and autocorrelation on house prices. This research improves on the investigation of house price convergence by developing a spatio-temporal autoregressive model based on a framework of panel regression methods. Both spatial heterogeneity and autocorrelation of house prices in different cities are taken into account. Geographical distance and the scale of development of the urban housing market are used to construct temporal varying spatial measurements. The spatio-temporal model is then applied to investigate the long-run equilibrium in the house prices of Australian capital cities. The results confirm that house prices in Sydney approach a steady state in the long run, whereas house prices in Brisbane, Canberra, Melbourne and Perth are able to do with lower confidence. However, little evidence supports the existence of long-run equilibrium in the house prices of Adelaide, Darwin and Hobart.

History

Journal

International real estate review

Volume

18

Pagination

503-521

Location

Rockville, Md.

ISSN

1029-6131

eISSN

2154-8919

Language

eng

Publication classification

C Journal article, C1 Refereed article in a scholarly journal

Copyright notice

2015, Global Social Science Institute

Issue

4

Publisher

Global Social Science Institute