Open AccessA Recent Development of the Spatial Disparity of Housing Prices in Iceland and Its Underlying Economic Causes
Author(s) -
Vífill Karlsson
Publication year - 2015
Publication title -
international journal of regional development
Language(s) - English
Resource type - Journals
ISSN - 2373-9851
DOI - 10.5296/ijrd.v2i2.8102
Subject(s) - amenity , economics , unit (ring theory) , value (mathematics) , economic geography , geography , mathematics , finance , mathematics education , statistics
In this paper, the author examines the development of the spatial distribution of housing prices. Due to consumer preferences for access over amenity value, there is a spatial disparity of housing prices. According to Alonso’s extension of von Tünen’s theory, the relationship between housing prices in urban and rural areas tends to follow certain principles. This relationship is more often negative than positive, i.e. the price of a standardized unit of housing declines with increasing distance from a central business district (CBD). It has been documented that this relationship is negative for Iceland, as well as in many regions of other countries. It is argued here that this relationship has become increasingly marked in Iceland, most likely due to the altered household preferences and structural changes. A macro panel data set from Iceland will be used, representing several essential variables of the residential housing market for 79 municipalities in Iceland from 1981 to 2006.