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Examining the spatial and non-spatial linkages between suburban housing markets

Morteza Moallemi (School of Economics, Finance and Marketing, RMIT University Melbourne Australia)
Daniel Melser (Department of Econometrics and Business Statistics, Monash University Melbourne Australia)
Ashton de Silva (School of Economics, Finance and Marketing, RMIT University Melbourne Australia)
Xiaoyan Chen (School of Economics, Finance and Marketing, RMIT University Melbourne Australia)

International Journal of Housing Markets and Analysis

ISSN: 1753-8270

Article publication date: 27 September 2021

Issue publication date: 1 December 2022

144

Abstract

Purpose

The purpose of this paper is on developing and implementing a model which provides a fuller and more comprehensive reflection of the interaction of house prices at the suburb level.

Design/methodology/approach

The authors examine how changes in housing prices evolve across space within the suburban context. In doing so, the authors developed a model which allows for suburbs to be connected both because of their geographic proximity but also by non-spatial factors, such as similarities in socioeconomic or demographic characteristics. This approach is applied to modelling home price dynamics in Melbourne, Australia, from 2007 to 2018.

Findings

The authors found that including both spatial and non-spatial linkages between suburbs provides a better representation of the data. It also provides new insights into the way spatial shocks are transmitted around the city and how suburban housing markets are clustered.

Originality/value

The authors have generalized the widely used SAR model and advocated building a spatial weights matrix that allows for both geographic and socioeconomic linkages between suburbs within the HOSAR framework. As the authors outlined, such a model can be easily estimated using maximum likelihood. The benefits of such a model are that it yields an improved fit to the data and more accurate spatial spill-over estimates.

Keywords

Citation

Moallemi, M., Melser, D., de Silva, A. and Chen, X. (2022), "Examining the spatial and non-spatial linkages between suburban housing markets", International Journal of Housing Markets and Analysis, Vol. 15 No. 5, pp. 1170-1194. https://doi.org/10.1108/IJHMA-07-2021-0082

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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