Academic journal article Journal of Real Estate Literature

Which Attributes Influence the Housing Markets across the Greek Islands?

Academic journal article Journal of Real Estate Literature

Which Attributes Influence the Housing Markets across the Greek Islands?

Article excerpt

Abstract

We analyze the drivers of the housing markets across the Greek Islands. Very little is known and documented about these markets in the literature. By reviewing the extant literature on housing market drivers in general, we delineate how various attributes characterize these housing markets. Heterogeneity in terms of properties, neighborhoods, settlements, islands, and groups of islands contributes to a diverse housing market. At the same time, the political environment, the recent economic recession, complex and unstable institutional frameworks, as well as being an increasingly popular tourist destination have created an environment with considerable housing research interest. By using a unique dataset of properties, we apply the hedonic modelling framework to ascertain the impacts of certain amenities and drivers that may affect housing values and market functioning across the Greek Islands. Our results, while confirming the standard results from the broad literature, also reveal some distinctive effects in the Greek Islands.

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The island region in Greece constitutes a rather special area to examine housing market issues as their economies, cultures, and geographies differ substantially from those of the continental part of the country. In this paper, to our knowledge, we probably provide the first empirical analysis of the drivers of housing markets in the region. Various aspects and attributes are examined such as the economic situation, regulatory framework, taxation system, public amenities, as well as the primary and more importantly the tertiary production sector-the tourism sector-which is the main source of GDP for most islands.

We study six main groups of the Greek Islands according to their geographical location (Exhibit T): (T) the Ionian Islands, (2) the North-East Aegean Islands, (3) the Sporades Islands, (4) the Argo-Saronic Islands, (5) the Cyclades Islands, and (6) the Dodecanese Islands. What makes this particular housing market rather interesting for investigation is the substantial heterogeneity that characterizes properties, settlements, islands, and groups of islands. Moreover, the recent global recession that greatly affected the Greek economy due to its political and socioeconomic vulnerability makes this an opportune time to study the regional housing markets. A better understanding of the housing issues is crucial for effective policy formulation to register sustainable recovery and attract potential investments by fostering economic and property market transparency. The fact that the housing markets of the Greek Islands have never been studied before, along with the peculiarities of the region necessitate formulation of an analytical framework.

To this end, we identify several attributes of these housing markets. These attributes are: (1 ) physical and locational heterogeneity, (2) durability, (3 ) political environment, (4) transaction costs, (5) imperfect and asymmetric information, (6) immovability or spatial fixity, and (7) external or local area effects. By using a unique dataset of housing units across 36 islands in the above mentioned six island groups, we apply the hedonic modeling technique to identify the relative importance of some of the observable attributes.

The rest of the paper is presented as follows: in the next section, we describe the Greek economy briefly. Next, we try to situate our research objectives within the extant literature. Then, the data and summary statistics are presented. In the following section, the empirical framework is discussed along with the results. Finally, some concluding remarks are provided.

SIGNIFICANCE OF GREECE AND THE GREEK ISLANDS

The Greek economy has experienced a huge amount of volatility in last few years. A global financial crisis coupled with significant weaknesses in the regional market has resulted in a state of uncertainty in the Greek economy. …

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