SPATIAL EQUILIBRIUM - THE RELATIONSHIP OF LOCAL LABOR MARKETS AND REAL ESTATE PRICES IN HUNGARY

Abstract

In Hungary, 85% of people live in their own property (Eurostat 2018), and many also possess real estate for investment or income generation purposes. Real estate is often the most valuable asset. 80% of the Hungarian population's wealth is held in real estate. Unsurprisingly, the most important determinants of Hungarian real estate prices are the prevalent macroeconomic processes: interest rates, in°ation, and demand. However, real estate prices vary considerably across regions, with regional and local characteristics playing a major role. Using cross-sectional data, Békés et al. (2016b) demonstrate that local income disparities and the geographical features of a given location are strongly correlated with property prices.