Examining the determinants on residential real estate prices. Evidence from Poland

Abstract

Financing the real estate market, and the housing market in particular, is an im-portant factor for conducting monetary policy as well as for banks in terms of credit risk levels. In addition, it is an important part of the economy affecting related sectors such as construction, capital and rental markets. Features of the real estate market such as high capital intensity, rigidity of supply and shifts over time make it easy for macroeconomic imbalances to occur. Sudden changes in financing lead to serious consequences for the entire economy. Therefore, the real estate market is important not only for developers, investors, but also for financial institutions, central banks and governments. In this article, we present a comprehensive discussion of the determinants of residential real estate prices in particular financial in Poland. Following an extensive literature review, an empirical study based on the pooled Ordinary Least Squares (OLS) estimation model is presented. Data published by Central Statistical Office and Centrum AMRON-SARFiN were used. We aggregated them for voivodeships and quarters, and concern 2010-2019 period. The result of the analysis enables us to identify the priority determinants of residential real estate prices in Poland, which turned out to be the fol-lowing factors: financial that is, income (average earnings per month) and demographic (new marriages). The rest of analyzed determinants, such as cost of construction, interest rates and supply of houses was found to be insignificant price determinants on Polish real estate market.