The Functioning of the Real Estate Market: Dynamics of Price Formation and the Sale of Apartments

Abstract

The aim of this publication is to analyse how the dynamics of apartments' price formation correlates with the development of the apartment market. Design/Methodology/Approach: We analysed data about real estate markets of Polish communes located in Central Pomerania. The values of the analysed indicators were calculated using Excel program and the results were presented in the form of Tables and Figures in Microsoft Excel and ArcMap. Findings: This publication focuses on issues related to price formation on the housing market with the objective to illustrate a correlation between the dynamics of price formation of apartments and the development of the apartment market. This study concentrates on the pricing behaviour of transactions in the primary and secondary real estate markets of apartments. Research results indicate that there is a relationship between the dynamics of price formation and the development of the apartment market in both the primary and secondary markets. The hypotheses have been positively verified. The analysis of the obtained data does not indicate the same tendencies in the transaction prices of the apartment properties in the researched seaside communes in the years 2014-2018. Practical Implications: The most important practical implication is that the analyzed seaside areas still have a large investment space for newer, more expensive and larger apartments. Originality/Value: Research analysis of the two markets shows that the primary market is characterised by a much greater volatility of the average transaction price per sqm of apartment's usable floor area, while the secondary market is much more stable in terms of the average transaction price. There is also a very large variation in the average price per sqm between the surveyed municipalities.

Econometric Modelling of Average Housing Prices in Local Markets and the Price Anchoring Effect

“…Research in this field has been conducted at various levels -local (e.g. Wolniak, et al, 2020), spatial (e.g. Tomal, 2019) and international (Dąbrowski, et al, 2020).…”

The Effect of Price Anchoring on the Housing Market Based on Studies of Local Markets in Poland

“…Related studies on the relationship between housing price dynamics and economic development have sometimes been conducted for selected local markets (e.g. Wolniak et al, 2020), as well as spatially (e.g. Tomal, 2019) and internationally (Dąbrowski et al, 2020).…”

“…Tomal, 2019) and internationally (Dąbrowski et al, 2020). Several similar studies on the relationship between housing price dynamics and economic development relate to selected local markets (e.g., Wolniak et al, 2020), as well as to geographical (e.g., Tomal, 2019) and international (Dąbrowski et al, 2020) aspects. Also, some study results have been published as an attempt to explain the mechanisms governing the dynamics of real estate prices (e.g., Belej & Kulesza 2015;Zelazowski, 2017).…”