Prague Economic Papers 2023, 32(5):488-519 | DOI: 10.18267/j.pep.840

European Housing Prices Through the Lens of Trends

Ales Melecky ORCID..., Daniel Paksi ORCID...
Department of Economics, VSB-Technical University of Ostrava, Ostrava, Czech Republic

We study convergence and club formation of housing prices in European countries using several measures of housing prices. We employ correlations, innovative trend and gap approaches, and cointegration analysis to study the long-term development of housing prices and their reactions to crises. We find that housing prices in European countries do not converge and their development since the creation of the monetary union has differed. The most prominent examples are the differences between Southern European countries heavily affected by the Global Financial Crisis and the rest of the countries. Our analysis reveals several country clubs with similar growth patterns and reaction to crises which do not necessarily follow the traditional division between old and new EU member states. Our findings are in line with the literature, which finds that housing prices in the EU do not converge overall, and housing prices do not co-move in general, but only within smaller subgroups, which may be regionally dispersed.

Keywords: convergence, correlation, cointegration, EU, housing prices, trends, JEL Codes: E31, G01, R31

Received: October 14, 2022; Revised: May 20, 2023; Accepted: May 22, 2023; Published: October 27, 2023  Show citation

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Melecky, A., & Paksi, D. (2023). European Housing Prices Through the Lens of Trends. Prague Economic Papers, 32(5), 488-519. doi: 10.18267/j.pep.840
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