Essays on the spatial analysis of the housing market

The housing unit always has been a great interest of the researchers because of its unique nature of being regarded as an investment good but also a durable good. Although, the most important point is that the housing unit cannot be imported, exported or transported, the literature has ignored this feature of housing unit, the feature that location matters for the housing market. Therefore, this work of three essays focuses on this feature of the housing market and aims to develop a better analysis of the housing market by considering the location based parameters as well. The first essay analyzes determinants of housing prices with respect to the spatial differences among regions of the England for the period of 2003-2011 by using spatial econometrics. The second essay develops the spatial volatility methodology with the help of DCC M-GARCH model. Finally, the third essay generates the spatial supply – demand model of housing. The results of the first essay imply that the effect of neighborhood and location matter for the house prices such that the house prices in any region co-move with the house prices of the neighborhood. Indeed, the location is regarded as the most important determinant of the house prices. Besides this, the results of the second essay provide the consistent conclusions with the first essay by showing that regional house prices comove. The most important contribution of the second essay has been the development of the spatial volatility model and turning the multivariate volatility to bivariate volatility model for the regional analysis. Moreover, the third essay results in the generation of a better demand – supply model for the housing market by considering the spatial parameters as well.