hiddenpropertiesofirishhousepricevintages.doc

Hidden Properties of Irish House Price Vintages Using spectral analysis, prices of two Irish house vintages are investigated for hidden periodicities. What emerges is a major periodicity consistent with an Irish business cycle. A further hidden intermediate cycle in second-hand housing, that is common to all areas of Eire but featured not nearly so prominently in new housing, is posited to be related to life events and space stress. By revisiting the housing market more often, the repeat buyer injects additional volatility in house prices. It is proposed that housing policy should be directed at reducing the number of repeat buyers as a means of deflating property bubbles. KEY WORDS: Housing Market, New and Second-hand House Prices, Ireland, Spectral Analysis, Loss Function, Common Cycles. Hidden Properties of Irish House Price Vintages Introduction Hui (2011) divides various threads of literature about house price diffusion into three. First, the ripple effect is where house price increases in the UK appear to be led by London and the South East (Meen, 1999; Gray, 2012). Second, there is price diffusion among housing of differing qualities (Coulson and McMillen, 2007; Ho et al., 2008; Hui, 2011; Smith and Ho, 1996). The last of these three relates to distinct house price dynamics among differing sub-markets (Renaud et al., 1998). When considering a ripple through differing housing vintages, Gray (2015) suggests that Cook and Holly (2000) began a fourth. It is in this fourth strand where this work makes a contribution. One can foresee distinctions in the market availability of new and second-hand properties. The price of a new build will be affected by monopoly practice (Barker, 2003) as well as the profitability of construction. Its supply will vary with the availability of land and construction times. The supply of second-hand properties will be related to the behaviour of owner-occupiers. To buy the next property, commonly the owner would have offer the