The private rental housing market before and during the COVID-19 pandemic: A submarket analysis in Cracow, Poland.

How the COVID-19 pandemic has altered the segmentation of residential rental markets is largely unknown. We therefore assessed rental housing submarkets before and during the pandemic in Cracow, Poland. We used geographically and temporally weighted regression to investigate the marginal prices of housing attributes over space-time. The marginal prices were further reduced to a few principal components per time period and spatially clustered to identify housing submarkets. Finally, we applied the adjusted Rand index to evaluate the spatiotemporal stability of the housing submarkets. The results revealed that the pandemic outbreak significantly lowered rents and modified the relevance of some housing characteristics for rental prices. Proximity to the university was no longer among the residential amenities during the pandemic. Similarly, the virus outbreak diminished the effect of a housing unit's proximity to the city center. The market partitioning showed that the number of Cracow's residential rental submarkets increased significantly as a result of the COVID-19 pandemic, as it enhanced the spatial variation in the marginal prices of covariates. Our findings suggest that the emergence of the coronavirus reshaped the residential rental market in three ways: Rents were decreased, the underlying rental price-determining factors changed, and the spatiotemporal submarket structure was altered.

Identification of house price bubbles using robust methodology: evidence from Polish provincial capitals.

This article aims to check whether there has been a price bubble in the Polish major housing markets in recent years. To accomplish this goal, the log price-to-rent ratios in Polish provincial cities were analysed. In order to avoid incorrect conclusions, the log price-to-rent ratio using the instrumental variable estimation and ordinary least squares methods was decomposed into two components: fundamental and non-fundamental. The latter was then examined using the Phillips, Shi, and Yu procedure to detect explosive and downward movements. The results of the study showed that, in general, over 2011, actual log price-to-rent ratios in the analysed cities were below their fundamental values, i.e., a negative price bubble existed. However, more or less since the beginning of 2013, the surveyed markets have seen an increasing level of the non-fundamental component of the index under study, and its particularly explosive movements are visible in the first quarters of 2014. Finally, this analysis indicated future research directions and study implications for Polish policy-makers, housing investors, and households.

Testing for overall and cluster convergence of housing rents using robust methodology: evidence from Polish provincial capitals.

The aim of this paper is to test for overall and cluster convergence of housing rents across Polish provincial capitals and to identify drivers of convergence club formation. In order to achieve the goal of the study, several novel convergence tests were used, including the Kong et al. (J Econom 209:185-207, 2019. https://doi.org/10.1016/j.jeconom.2018.12.022) and Phillips and Sul (Econometrica 75:1771-1855, 2007. https://doi.org/10.1111/j.1468-0262.2007.00811.x) approaches. Moreover, club convergence analysis was carried out in four different configurations, varying in the technique of trend component extraction from the data. In particular, three well-known methods of time series decomposition were used, i.e. the Hodrick-Prescott, Butterworth and Christiano-Fitzgerald filters, as well as the most recent boosted Hodrick-Prescott filter. The results indicated that rental prices across the studied cities do not share a common path in the long run. It is possible, however, to identify convergence clubs where rents are moving towards a club-specific steady state. Detailed analysis of the structure of estimated clusters showed that data filtering using the boosted Hodrick-Prescott method leads to the most reliable allocation of cities to convergence clubs. Moreover, the estimation of logit models revealed that the likelihood of any two cities belonging to the same convergence club depends mainly on similar levels in terms of the unemployment rate, housing stock, city area, and the number of students. Finally, recommendations for local and national policy-makers concerning the development of the rental market have been formulated, particularly in the areas of urban land-use planning policy, housing legislation and public-private partnerships.