Fungible house prices: Disentangling owner-occupation and investment properties

Abstract

Changes in house prices are driven by many local and global forces. For instance, drivers of house prices could be social, economic, environmental and/or political in nature. Here the authors explore differences in owner-occupation and investment as significant drivers of residential house price change. Analysis explores correlations of a global house sales price variations, and the corresponding house price sales price variations for: (a) owner-occupiers; and (b) those identified as investment properties. Investment identifiers in this case are those that are not owner-occupiers, purchasing two or more homes. The research uses sales data for the city of Auckland (New Zealand) over 36 years (1981 to 2017) at household point level, containing 1.6 million observations. Findings are significant to the discourse on housing affordability and the different decision frameworks for pricing of assets. Particularly as pricing of residential property has been largely fungible when considering both owner-occupation and investment properties within the same asset market.