A regional analysis of house prices in Greece

Purpose – This paper examines the housing market in Greece after the Global Financial Crisis focusing on regional analysis and urban markets in Athens and Thessaloniki. Design/methodology/approach – The paper employs a dataset of over 70,750 property values from 2007 until 2014 incorporating characteristics variables upon which hedonic models are estimated. These form the bases for calculating value indices for mix adjusted houses/apartments by year and region. The indices are used in a panel model in which regional and economic variables are included as independent variables. Using advances in dynamic panel data modelling, a bias-corrected least squares dummy variable model (LSDVC) is applied. Findings – Results indicate the importance of macroeconomic variables in terms of the role of disposable income and significantly different regional effects. Examining the major urban markets, results indicate significant differences in the response of house values to exogenous demand side influences, consistent with the finding of significant regional differences in the LSDVC. Practical implications –Regional heterogeneity needs to be considered in model estimation. Social implications – Policymakers should consider regional differences to improve policy effectiveness. Originality/value – This is the first paper to use a large sample of residential properties in Greece and apply the LSDVC model to overcome estimation biases