A panel error correction approach to explore spatial correlation patterns of the dominant housing market in Australian capital cities
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 30 September 2013
Abstract
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.
Keywords
Citation
Ma, L. and Liu, C. (2013), "A panel error correction approach to explore spatial correlation patterns of the dominant housing market in Australian capital cities", International Journal of Housing Markets and Analysis, Vol. 6 No. 4, pp. 405-421. https://doi.org/10.1108/IJHMA-03-2013-0021
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited