Panel Analysis of Polish Regional Cities : Residential Price Convergence in the Primary Market

We employ two methodologies in order to identify groupings of cities and to analyse the factors which drive convergence in residential prices across Polish prime markets over the period 2007-2018. The Phillips and Sul (2007) methodology is first used to identify convergence in primary residential prices in the major Polish cities. The results indicate that residential prices do not converge to a single common trend. However, we find the existence of three distinct sub-groups of cities (‘clubs'), where residential prices converge to each club's steady-state path. Using an ordered logit model, we investigate supply and demand factors determining club membership, the model allocating 13 out of the 15 cities as belonging to the clubs identified by the Phillips and Sul procedure