Determinants of housing prices in Spanish’ urban areas

Abstract

Residential price level in Spain varies broadly among markets. Real state theory explains that prices depend on market characteristics such as vacancy level, land availability, construction offer elasticity to respond to high or low speed to changes on the demand, as well as economic growth potentiality, industrial and services activities located inside urban areas, etc. Price analysis in main Spanish main cities show that tensions appear to exist in some of them where economic activity is not as dynamic as others (Taltavull, 1999). These tensions are reflected in price levels in places where main economic activities are not the most efficient ones. This paper tries to find evidence of the existent relationship between residential prices and economic factors that are demand determinants such wages, migrations and productive structure, among others. It uses panel data and GLS methodology to capture relationship between prices and other economic and demographic factors and demographic nature. The results show how some relationships appears to exist between price levels and families’ waged income as well as with population into 71 different main cities in Spain.