The regional variation of a housing boom. Disparities of land prices in Austria, 2000-2018.

Abstract

Debates accompanying the global housing boom have primarily focussed on the economic and social implications for urban housing markets. Against this background, this paper analyses the repercussions for regional land prices of a national housing boom in and beyond agglomerations. Convergence and divergence dynamics, regional price drivers, and spatial diffusion are investigated by examining average building-land prices of 95 Austrian regions between 2000 and 2018. The results indicate a clear increase in regional disparities in land prices, with the main rise taking place during a high price-growth period. Regions with high land prices are the main drivers of divergence, while a substantial number of peripheral regions with converging land prices were hardly affected by the national price boom. Land-price growth rates are positively affected by the number of households but negatively impacted by income growth, which points to a problematic decoupling of household income and land prices. Finally, the diffusion of the land-price boom occurs along the urban hierarchy as well as via neighbouring regions, confirming the ripple-effect hypothesis.