The Housing Market across the Greek Islands

The Housing Market across the Greek Islands

Dimitra KavarnouUniversity of Reading

[email protected]

mailto:[email protected]





Dimitra Kavarnou - Henley Business School, University of Reading

A bit more of Geography…


A bit more of Geography…

•>than 6,000 islands/isles•117 inhabited islands•79 islands >100 (population)•53 islands>1,000


Ionian IslandsSporades Islands

Argo Saronic Islands

Cyclades Islands

North East Aegean Sea Islands

Dodecanese Islands


Size…Group Number of

Islands in this Research

Population Geographical Size (m2)

Ionian Islands 5 203,210 2,200North East Aegean Sea Islands

5194,820 3,685

Argo – Saronic Islands

3

45,270 167Sporades Islands 4 16,700 417.5Cyclades Islands 11 108,370 1,947.36Dodecanese Islands 8 185,950 2,345Total 36 754,320 10,761.86


Attributes of the Housing Market - I

1. Heterogeneity• Heterogeneity in many levels

Property/ Neighbourhood/ Settlement (Villages/towns)/ Islands/ Groups of Islands

• Housing SubmarketsIslands – Groups of Islands

2. Durability• Community formation (trade/ piracies/ occupations/

wars)• Horizontal ownership (bequests)• Ownership rate 80% - Cultural Aspect• Financial Course

Booms and Recessions


Attributes of the Housing Market - II3. Political Economy

• Plethora of laws/ rules/ regulation• Tax Regime continuously changing –

Unstable• New Laws and additional taxation

established and applied from 01-01/2014• Taxation constitutes a Disincentive to be a

homeowner – investor4. Transactional Costs• High Transaction Costs• Among the highest in EU


Attributes of the Housing Market - III

5. Imperfect Information• Lack of an well-organised information institution• Insufficient National Cadastre• The area of the islands is not mapped• Competitive, unprofessional, non-accredited

brokerage industry6. Immovability• Any real estate/housing market is immovable• Increased demand for spatial development

(amenities, infrastructure, employment, etc.)• More evident to islands which have physical

boundaries


Attributes of the Housing Market – IV

7. External EffectsMain focus on the heterogeneity in island/

group of islands level: the public amenities (Presence of public

amenities on the islands/ distance from properties)

• Port (distance)• Hospital (presence)• Airport (presence and distance)• University (presence) Tourism rate Luxury rate Density (population/ geographical size)


Hedonic Research: Idea• This research assesses and analyses the variables

that compose the house prices in the islands of Greece

• This research examines the impact/ significance of local public amenities on house prices across 36 islands of Greece

• The model controls for several structural and locational characteristics of the properties as well as economic and demographic attributes of the islands


Methodology - I• Hedonic Regression Method (The method that decomposes the dependant variable under the scope into its constituent characteristics, and obtains assessments of the contributory value of each specific characteristic)(Rosen; 1974, Roback;1982, Bajari and Benkard; 2005)

In this research, the dependant variable (Y) is the Assessed Housing Prices - AHP or P for every property (i) , island(j), group of island(k)

Pi,j,k = α + ∑β Xi,j,k + εi,j,k

In order to mitigate the problem of heteroskedasticity as well as to compare percentage-wise the effect on the Assessed Housing Prices

(1) log(Pi,j,k)= α + ∑β Xi,j,k + εi,j,k

Υi = α + β1Χ1 + β2Χ2 + …+ βi Xi + εi


Methodology - IIBut Τhere are also island characteristics for each island (j):

(2) log(Pi,j,k) = α + ∑β Xi,j,k + ∑γZj,k + εi,j,k

Controlling the Fixed Effects for each island:(3) log(Pi,j,k) = α + ∑β Xi,j,k + δj + εi,j,k

(Boundary fixed effects model: Black;1999, Clapp, Nanda and Ross; 2008)where δ is the total unobserved effects for each island (j) - dummies


Data - I1. Two files from the Bank of Greece including properties in the islands that have been evaluated from 2005-2013 with property characteristics:

The property characteristics (Xi,j,k) included are:• Some details about the property location (not exact)• The living space (m2)• The land area (m2)• The date/year of permit, completion, evaluation• The property type (flat/detached house/ maisonette) and

the floor• Some information about the construction quality, the

neighbourhood, the view (limited) • Some information about the store rooms and the parking

spaces

file 1 11,553file 2 3,384

Total 14,937 pr.

Data - IILimitations of the dataset• Not exact location (address/number, to many cases

only local toponyms of settlements) Either because of incomplete dataset from the

estimatorsBut Mainly because the properties in the Islands do not

have an address themselves but they refer to the closest village/settlement

With this very limited information about their location, it was VERY difficult and time-consuming to spot the properties and calculate their distances from the amenities (ports/airports)

• Lots of missing/ incomplete values from the evaluators (view, land, year of completion/permit)



Data - III• Data Set Cleaning:Out of the 14,937 properties I received, I excluded:- 3,620 properties in Evvoia and Crete (separate analysis – research)- 850 approx. duplications- 500 approx. did not concern properties on islands (incorrect entries)- 3,000 approx. to which the land area was not available - 300 approx. to which the year of completion or the year of permit was

not available (not able to calculate the age of the property) - 300 approx. concerned islands with population<1,000p. or islands with

insufficient number of observations/island (<15) 6,350 properties approx. in 36 islands to be spotted and calculated- 2,000 properties approx. not able to spot/ find the approx. location of the closer village in Google Earth/ Google maps 4, 369 properties spotted in the final dataset


Data - IVSpotting the properties in Google Earth (approximately)


Data - V


Data - VI

Calculating time distances in Google mapsto port: to airport:


Data Analysis - II

•


Data Analysis - III• Deflation of Assessed Housing PricesThe Prices are deflated and expressed in December 2012 prices:

where:HICPDec2012= 123.28HICPt = the HICP of the month year of the evaluation(Source of the HICP tables: Hellenic Statistic Authority)

• Dummy Variables Xi,j,k for the property types:

- Flat- Detached House- Maisonette

Data Analysis - IV• Dummy Variables (Zj,k) for controlling:- The Presence of Airport on the island- The Presence of Prefectural General Hospital on the island- The Presence of University on the island

• Dummy Variables (δj) for the fixed effects - controlling the unobserved heterogeneity of the islands (one dummy for each island)

• Dummy Variables (Xi,j,k) for controlling:• View (whether the property has view to the sea or not)• Proximity to Capital (whether the property is located in

the island’s capital or not)• Coastal Settlement (whether the property is located in a

coastal settlement or not)Dimitra Kavarnou - Henley Business School,

University of Reading


Descriptive Statistics – of the Groups 1. Ionian Islands 1. North-East Aegean Islands 1. Sporades Islands

Variable N Mean Median SD N Mean Median SD N Mean Median SD

Assessed Values 980

363,409 208,389 201,879 848

219,071 166,450 189,111 232

287,149 236,294 257,949

Living Space 980

139 119 90 848

131 113 112 232

149 119 157

Land 980

1,061 313 2,373 848

636 131 1541 232

2080 517 6890

Age 980

14 6 18 848

30 23 22 232

19 11 22

Tourism(1000s) 980

25.0271 0.0420 43.6460 848

6.0631 0.9480 9.6050 232

- - -

Density(1000s/m2)

980

0.1041 0.0331 0.1707 848

0.0566 0.0330 0.0688 232

0.0437 0.0141 0.1273

1. Argo-Saronic Islands 1. Cyclades Islands 1. Dodecanese Islands

Variable N Mean Median SD N Mean Median SD N Median SD

Assessed Values 355

325,058 251,804 258,350 966

434,331 290,441 830,450 988

237,470 196,683 191,292

Living Space 355

137 120 75 966

147 119 108 988

124 103 93

Land 355

536 304 944 966

1733 352 3841 988

707 133 2162

Age 355

8 8 4 966

17 8 24 988

20 19 13

Tourism(1000s) 355

- - - 966

4.3298 0.1630 11.8380 988

50.9470 0.4590 85.6460

Density(1000s/m2)

355

0.3371 0.0396 0.4128 966

0.0898 0.0135 0.2544 988

0.0939 0.0135 0.1504

Results OLS - GroupsDependent Variable: LOG(REAL_ASSESSED_VALUES)

Variables (Xi,j,k) Ionian Islands North East Aegean Islands

Sporades Islands

ArgoSaronic Islands

Cyclades Islands

Dodecanese Islands

C 10.35***(81.62)

8.23***(48.10)

9.34***(25.64)

9.00***(28.42)

8.94***(72.85)

8.41***(45.56)

Log(Living_Space) 0.67***(20.75)

0.80***(19.15)

0.61***(7.73)

0.70***(11.35)

0.71***(20.32)

0.68***(17.85)

Log(land) 0.13***(6.45)

0.04*(1.68)

0.03(0.73)

0.13**(2.05)

0.05**(2.33)

0.17***(6.89)

Age -0.004***(-5.40)

-0.005***(-9.19)

-0.006***(-3.87)

-0.005***(-4.16)

-0.005***(-7.82)

-0.005***(-7.58)

t2 -0.21***(-7.69)

-0.16***(-5.93)

-0.121*(-1.84)

-0.16***(-3.29)

-0.11***(-3.68)

-0.10***(-3.88)

t3 -0.007(-0.11)

0.25***(5.66)

-0.053(-0.35)

-0.24*(-1.76)

0.03(0.40)

0.02(0.31)

PUR 0.0004(0.94)

-0.001***(-3.01)

-0.001(-1.59)

-0.0002(-0.21)

-0.0006(-1.17)

0.002***(3.05)

Floor 0.01(0.65)

-0.006(-0.62)

0.056(1.29)

0.06**(2.00)

0.002(0.22)

-0.02(-1.51)

View 0.25***(5.41)

0.22***(5.92)

0.07(0.95)

0.252***(4.90)

0.22***(7.45)

0.17***(5.55)

Presence_Hospital 1.04***(13.02)

--

- 0.04(0.58)

0.42*(1.88)

Presence_University - 0.13(1.25)

- - -0.171(-0.59)

-0.21***(-3.48)

Presence_Airport -2.39***(-30.69)

- 0.009(0.14)

- -0.007(-0.14)

-0.50***(-4.42)

PtCapital 0.21***(5.32)

0.04(1.27)

0.03(0.45)

0.071(1.53)

0.05(1.50)

0.06*(1.93)

Coastal_Settlement 0.03(0.88)

0.10***(2.69)

0.05(0.61)

0.11(1.10)

0.07**(2.34)

0.08***(2.80)

Tourism 0.16***(32.76)

0.001(0.21)

- - -0.03(-1.46)

-0.02***(-9.16)

Luxury 0.36***(16.06)

-0.06(-1.63)

- - 0.37***(8.09)

0.09***(36.11)

Density -56.26***-26.33)

-1.24(-0.80)

1.46(1.60)

-2.05***(-9.76)

-0.02(-0.02)

-3.59**(-2.07)

R2 0.63 0.68 0.52 0.67 0.68 0.71

N 975 844 231 353 958 965


Results Fixed Effects- Groups


FIXED EFFECTS Ionian Islands North East Aegean Sea

Islands Argo – Saronic Islands

Sporades Islands Cyclades Islands Dodecanese Islands

(1) (2) (3) (4) (1) (2) (3) (4) (1) (2) (1) (2) (3) (4) (1) (2) (3) (4) (1) (2) (3) (4) R-sq 0.594 0.629 0.588 0.618 0.656 0.686 0.657 0.687 0.674 0.702 0.530 0.539 0.459 0.473 0.664 0.696 0.729 0.754 0.690 0.706 0.699 0.720 N 977 975 799 797 844 844 844 844 355 353 232 231 99 99 962 958 581 578 988 965 871 848 C 8.428***

(269.97) 8.444*** (91.12)

8.422*** (152.15)

8.438*** (52.44)

8.282*** (49.01)

8.349*** (93.42)

8.294*** (52.37)

8.363*** (94.66)

8.400*** (37.80)

8.630*** (40.27)

9.214*** (28.41)

9.166*** (40.51)

9.612*** (92.12)

9.482*** (37.25)

8.978*** (50.26)

8.979*** (54.54)

8.852*** (40.25)

8.950*** (44.49)

8.087*** (38.54)

8.080*** (38.88)

8.105*** (32.40)

8.133*** (35.51)

log_ls 0.666*** (13.18)

0.647*** (12.45)

0.667*** (9.32)

0.651*** (8.29)

0.819*** (12.27)

0.788*** (15.69)

0.820*** (12.05)

0.791*** (15.62)

0.762*** (22.16)

0.722*** (20.65)

0.637*** (14.58)

0.607*** (9.93)

0.555*** (44.66)

0.516*** (213.34)

0.727*** (15.07)

0.701*** (16.02)

0.729*** (12.08)

0.685*** (13.49)

0.709*** (23.84)

0.686*** (23.88)

0.730*** (20.49)

0.706*** (21.29)

log_land

0.144*** (4.49)

0.142*** (6.02)

0.140*** (3.46)

0.139*** (4.18)

0.054* (1.67)

0.044 (1.51)

0.053 (1.60)

0.042 (1.42)

0.124* (1.78)

0.098 (1.32)

0.035** (2.25)

0.046*** (4.01)

0.064*** (32.41)

0.070** (2.45)

0.0526** (2.42)

0.046** (2.03)

0.066** (2.27)

0.058* (1.82)

0.153*** (5.23)

0.160*** (5.34)

0.132*** (4.61)

0.138*** (5.10)

age -0.004*** (-3.71)

-0.004*** (-3.80)

-0.004*** (-5.31)

-0.005*** (-7.57)

-0.006*** (-9.36)

-0.005*** (-7.35)

-0.006*** (-9.37)

-0.005*** (-7.44)

-0.006** (2.23)

-0.006*** (-2.65)

-0.005*** (-4.57)

-0.006*** (-4.74)

-0.007*** (-19.78)

-0.007*** (-3.91)

-0.006*** (-5.18)

-0.005*** (-4.77)

-0.006*** (-6.71)

-0.005*** (-6.70)

-0.005*** (-4.17)

-0.005*** (-3.80)

-0.006*** (-4.35)

-0.005*** (-3.79)

t2 -0.201*** (-4.35)

-0.198*** (-6.15)

-0.193*** (-5.21)

-0.188*** (-8.04)

-0.190*** (-3.41)

-0.158*** (-2.63)

-0.191*** (-3.41)

-0.160*** (-2.62)

-0.131*** (-7.33)

-0.142*** (-8.17)

-0.112 (-0.81)

-0.112 (-0.80)

-0.319*** (-6.87)

-0.303*** (-5.00)

-0.155** (-2.17)

-0.113 (-1.49)

-0.104** (-1.96)

-0.040 (-0.85)

-0.087*** (-4.77)

-0.079*** (-4.37)

-0.074*** (-4.17)

-0.069*** (-4.21)

t3 -0.042 (-0.68)

-0.020 (-0.48)

-0.054 (-0.76)

-0.029 (-0.56)

0.227*** (4.22)

0.240*** (2.65)

0.226*** (4.14)

0.238*** (2.63)

-0.241*** (-13.73)

-0.239*** (-14.95)

-0.029 (-0.24)

-0.027 (-0.33)

0.011 (-1.00)

0.001 (0.14)

-0.030 (-0.25)

-0.010 (-0.09)

0.188*** (3.13)

0.202*** (3.05)

0.029 (0.50)

0.038 (0.77)

0.031 (0.58)

0.038 (0.78)

pur 0.001* (1.69)

0.001 (1.19)

0.001 (1.27)

0.001 (0.87)

-0.001*** (-4.99)

-0.001*** (-4.81)

-0.001*** (-4.25)

-0.001*** (-4.89)

-0.001 (-0.43)

-0.001 (-0.64)

-0.001** (-1.99)

-0.001*** (-3.20)

-0.001 (-1.12)

-0.001*** (-3.55)

-0.000 (-0.39)

-0.001 (-1.30)

0.000 (0.56)

-0.000 (0.59)

0.002*** (3.10)

0.002*** (2.71)

0.001** (2.36)

0.001** (2.34)

floor 0.004 (0.35)

0.010 (1.03)

0.012 (1.37)

0.017* (1.66)

-0.011 (-1.26)

-0.007 (-0.66)

-0.011 (-1.28)

-0.007 (-0.68)

0.061 (-1.30)

0.040 (0.90)

0.072** (2.18)

0.073** (2.01)

0.087* (-1.67)

0.094 (1.40)

0.003 (0.30)

0.006 (0.46)

0.003 (0.22)

0.002 (0.26)

-0.012 (-1.21)

-0.016 (1.46)

-0.009 (-1.07)

-0.012 (-1.01)

ttp -0.006*** (-5.93)

-0.005*** (-5.44)

-0.006*** (-3.22)

-0.004** (-1.98)

-0.003*** (-6.92)

-0.002*** (-3.90)

-0.002** (-2.55)

-0.001 (-0.88)

-0.018*** (-17.76)

-0.022*** (16.54)

0.005*** (2.63)

0.006** (2.01)

0.004 (1.45)

0.007*** (12.75)

0.000 (0.13)

0.000 (0.01)

0.007 (1.56)

0.006 (1.25)

-0.002*** (-2.91)

-0.002** (-2.09)

-0.004** (-2.05)

-0.004*** (-2.79)

tta - - -0.001 (-0.65)

-0.001 (-0.80)

- - -0.001 (-1.50)

-0.001** (-2.08)

- - - - -0.004** (-2.56)

-0.004** (-2.32)

- - -0.007 (-1.52)

-0.006 (-1.19)

- - 0.003* (1.84)

0.001 (1.02)

view - 0.257*** (4.31)

- 0.234*** (3.15)

- 0.227*** (5.62)

- 0.223*** (5.94)

- 0.264*** (4.31)

- 0.042 (0.65)

- 0.027 (0.23)

- 0.247*** (5.22)

- 0.223*** (3.66)

- 0.188*** (4.33)

- 0.207*** (3.50)

ptcapital

- 0.137*** (3.25)

- 0.123* (1.88)

- 0.003 (0.08)

- -0.003 (-0.08)

- 0.006 (0.16)

- 0.075 (1.35)

- 0.109*** (6.51)

- 0.0635 (1.53)

- 0.149** (2.40)

- 0.038 (0.82)

- -0.029*** (-3.53)

coastal_settlem

- 0.029 (0.34)

- 0.040 (0.36)

- 0.087** (2.10)

- 0.095** (2.39)

- 0.127** (2.20)

- 0.090 (1.05)

- 0.249*** (7.25)

- 0.067** (2.12)

- 0.062 (1.27)

- 0.069* (1.73)

- 0.104*** (8.62)


RESULTS –I Individual Islands• For 33/36 islands the living space is positively very significant to the

prices (1% significance level) while the rest 3 islands (are the islands with

very small sample 15-21 obs)1% increase in living space 0.34-1.07% increase to the prices

( 0.72% increase - weighted average)

• For 21/36 islands the land space is positively (very) significant (1% or 5%)

1% increase in the land area 0.07-0.50% increase to the prices (0.14% increase - weighted average)

• The Property Utilisation Ratio is relatively not significant for most of the islands (gardens/yards not significant – only in 6 islands)

• The floor number is relatively not significant for most of the islands (only in 6 islands)


RESULTS - II• The property type (flats/detached houses/

maisonettes) seems to be very significant for some of the islands

Detached houses to 14/36 islands negatively very significant (1-5%) compared to flats

i.e. The flats are more expensive compared to detached houses

Maisonettes to 5/22 islands negatively very significant (1-5%) compared to flats

i.e. The flats are more expensive compared to maisonettesMaisonettes to 4/22 islands positively very significant (1-5%)

compared to flats i.e. The flats are less expensive compared to maisonettes –

probably because of their construction/ property characteristics/ extra facilities/ landscape

• The Age is negatively very significant (1-5%) for most of the islands (26/36)

Every Additional Year 0.3-1.4% decrease of house prices

(0.7% decrease - weighted average)


RESULTS – III

• ViewFor 23/36 islands the view is positively (very) significant (1-5% significance level)Approx. 13.1 – 64.2% more expensive compared to the properties without view (30.2% weighted average)

• Proximity to CapitalFor 7/36 islands the PtCapital is positively (very) significant (1-5% significance level) while for 2/36 islands the PtCapital is negatively (very) significant (1-5% significance level)8/36 Approx. 30.3% (weighted average) more expensive2/36 Approx. 25.2% (weighted average) less expensive

• Coastal SettlementFor 5/36 islands if the property is located in a coastal settlement, it is positively (very) significant (1-5% significance level) Approx. 15.3% more expensive compared to a non coastal settlementwhile for 1/36 islands Coastal Settlement is negatively (very) significant (1-5% significance level)


RESULTS – VTime Distance to Port:• For the bigger islands (big distances) the time

distance to the port is negatively very significant (1-5%) - the closer to the port, the more expensive (Corfu, Kefallonia, Rhodes)- apart from specific cases (eg. Lesvos)

• For the smaller islands (not very big in size) the time distance to the port was not very significant - apart from specific cases (eg. Paros – Milos – Salamina commuting purposes)

• 11/36 islands showed significance in some of the regressions

Where: 10-13 had negative significance (the less the time - the closer to the port- the more expensive)

While: 3/13 had positive significance (the less the time – the closer to port – the less expensive)


RESULTS – VITime Distance to Airport:• For some of the islands the time distance to the

airport is positively very significant (1-10%) – the closer to the airport the less expensive - apart from specific cases (eg. Milos) - Probably because of the noise and disturbance.

• 8/22 islands showed significance in some of the regressions

Where: 5/8 had positive significance (the less the time - the closer to the airport- the less expensive)

While: 3/8 had negative significance (the less the time – the closer to airport – the more expensive)


Thank you

The Housing Market across the Greek Islands

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