Template-type: ReDIF-Paper 1.0
Author-Name: Adrian Fernández-Pérez
Author-Email: adrian.fernandez-perez@ucd.ie
Author-Workplace-Name: Department of Banking and Finance, Michael Smurfit Graduate Business School, University of College Dublin, Ireland.
Author-Name: Marta Gómez-Puig
Author-Email: marta.gomezpuig@ub.edu
Author-Person: pgm5
Author-Workplace-Name: bDepartment of Economics and Riskcenter, Universitat de Barcelona. 08034 Barcelona, Spain.
Author-Name: Simón Sosvilla-Rivero
Author-Email: carlos.vidal@uv.es
Author-Person: sosvilla@ccee.ucm.es
Author-Workplace-Name: Instituto Complutense de Análisis Económico (ICAE), Universidad Complutense de Madrid (Spain).
Title: El Clasico of Housing: Bubbles in Madrid and Barcelona’s Real Estate Markets
Abstract: This paper contributes to the housing bubble literature by analysing rental and sales price dynamics in Spain’s 
	two largest urban centres—Madrid and Barcelona—between May 2007 and December 2024. Using monthly data from Idealista.com, 
	Spain’s leading real estate platform, we detect the presence of price bubbles in both markets, assess their key determinants,
	and explore contagion effects across cities and segments. Our results show that while only a few bubbles emerged, they were of 
	substantial duration. We also find evidence of	contagion, with rental bubbles consistently preceding sales bubbles, underscoring 
	the pivotal role of rental markets in driving price surges. Among the key determinants, higher hotel stays are associated with 
	a reduced probability of housing bubbles, suggesting that more hotel-based tourists may help stabilise real estate markets in 
	both urban centres. Rising interest rates and the availability of housing certificates are also linked to lower bubble risk. 
	Conversely, increasing resident numbers significantly raise the likelihood of positive bubbles, whereas higher unemployment 
	dampens it. These findings offer critical insights for housing policy in major urban areas.
Classification-JEL:  R31, G12, E44.
Keywords: Bubbles; Local Projections; Contagion; Real Estate Markets.
Note: Funding: This paper is based on work supported by the Spanish Ministry of Science and Innovation [grants PID2019-105986GB-C21 and TED2021-129891B-I00], the 
	Spanish State Investigation Agency [grant AEI/10.13039/501100011033] and Generalitat de Catalunya [grant 2023CLIMA00012].
	Acknowledgements: The authors wish to thank Idealista.com for kindly providing us with the data set.
Length: 43 pages 
Creation-Date: 2025
Number: 2025-03
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doicae2503.txt
File-URL: https://hdl.handle.net/20.500.14352/119804
File-Format: Application/html
Handle: RePEc:ucm:doicae:2503