The Relationship between Housing Prices and Market Transparency. Evidence from the Metropolitan European Markets

Abstract

This paper develops an empirical analysis quantifying the housing prices reaction to market transparency in 21 European metropolitan areas for the period 2004–2016. Market transparency is measured by the Global Real Estate Transparency Index (JLL) with its five dimensions. Applying a biannual panel EGLS model regression with fixed effects by cities as on data collected from several resources and measuring transparency using JLL index, results quantify the housing price elasticity of responses to changes in transparency. Results indicate that a decrease in transparency level is associated with an increase in house prices. The effect of transparency on the housing prices is heterogeneous in European metropolises, with most visible impacts in the Eastern metropolitan areas (Bratislava, Bucharest, Warsaw and Zagreb) but also in Western areas such as Copenhagen, Dublin and Madrid. London, Paris and Amsterdam also show how large transparency contributes to low house price increase, as the market fundamentals support.