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Understanding the Dynamics of the Portuguese Housing Market: A Panel Data Approach

Aluno: Zofia Anna RzĄd


Resumo
Housing markets significantly influence financial stability, investment patterns and regional development. To identify market trends there is a need to understand the mechanism influencing housing prices. Many economic factors have unquestionable impact and cause fluctuations in the sector and understanding the mechanisms behind housing price fluctuations is crucial for ensuring stability and sustainable growth. Implementing robust econometric models is essential for identifying the trends. This dissertation examines the dynamics of the Portuguese housing market and contributes to an understanding of the price formation mechanisms in the sector, focusing on the role of foreign investment and short-term rentals. The chosen topic of this paper and analysis of the housing sector in Portugal is relevant because of the unique characteristics of the Portuguese market and the observed changes in recent years. The Portuguese context – characterized by liberalization policies, the Golden Visa Program, and the rise of platform like Airbnb – offers a unique setting to explore the socio- economic impacts of housing market shifts. Using regional panel data from Q4 2019 to Q2 2024, we apply a fixed-effects econometric approach to assess the influence of these variables. Our analysis finds that a one-way fixed-effects model most effectively captures the impact of foreign investment and the expansion of short-term rentals on housing prices, offering a balanced trade-off between explanatory power and model simplicity. This study contributes to the understanding of contemporary housing challenges in Portugal, highlighting implications for both economic stability and social equity. This is not just an academic exercise – these issues have a direct impact on economic stability and social justice of residents.


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