Michał Głuszak, Małgorzata Rymarzak
Expectations and House Prices: An Exploratory Analysis
Purpose: Economic theory, as well as numerous empirical evidence coming from various countries suggest that market sentiments have significant impact on house price dynamics.
Methods: In the research we explore the formation of beliefs regarding the past house price dynamics and expectations about future house price developments in Krakow from 2009 to 2018. In the paper we use house price expectations data coming from housing survey. To investigate the role of socio-economic characteristics on prediction accuracy we estimated two logit models, for beliefs and expectations respectively.
Findings: Findings suggest that in most years respondents were able to roughly predict the house price dynamics in the study period, nonetheless residential property market in Krakow was mostly stagnant in that period, and few rapid changes were observed. Respondents failed to foresee changing dynamics of the residential property market in 2014. We did not observe that simple demographic and economic traits, like age and income, correspond with agents success in predicting house price movement.
Research implications: The study is the first attempt to explore beliefs and expectations of house buyers in Poland, and one of few research papers on of house price expectation formation in Central Eastern European countries.
Keywords: expectations; beliefs; house prices; survey
JEL codes: D84; G12; R21
Category of the paper: research article
CITATION (APA): Głuszak, M., & Rymarzak, M. (2019). Expectations and House Prices: An Exploratory Analysis. World of Real Estate Journal, 110(4), 15-28.