House price diffusion of housing submarkets in Greater Sydney

What is it about?

This study examines spillover effects among housing submarkets within a metropolitan city.

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Why is it important?

The results show that a long-run relationship in house prices exists between these two submarkets in Greater Sydney. Importantly, the empirical results show that a large degree of diffusion takes place from the less prosperous submarket to the high-end submarket. This supports the equity transfer hypothesis via a filtering process in which house prices in the low-priced submarket will be transmitted into the high-priced submarket. The study also finds that the low-priced submarket is the primary reactor to changes in economic fundamentals.

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