Analyzing the Impact of Microeconomic and

Macroeconomic Factors on Average House Prices per City

June 2024

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Contents
1 Introduction 3

2 Preparation of the dataset: 3

3 Descriptive statistics: 4

4 Correlation Analysis : 4

5 The impact of micro and macro economic variables on the price of All Houses with
2, 3, 4 or More Facades (excluding Apartments): 6

6 The impact of micro and macro economic variables on the Price of Houses with 2 or
3 Facades (Terraced/Semi-Detached): 7

7 The impact of micro and macro economic variables on the Price of Houses with 4 or
More Facades (Detached Houses):
9

8 The impact of micro and macro economic variables on the Price of Apartments: 10

9 Conclusion 11

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1 Introduction
The housing market is influenced by a myriad of factors that range from individual income levels to
broader economic conditions. This study aims to investigate the effects of both microeconomic and
macroeconomic variables on average house prices across various cities. By dissecting these factors, we
can better understand the dynamics that drive housing prices and identify key elements that influence
market trends.
The analysis focuses on several critical variables:

• Microeconomic Factors: These include income levels, the location of the house, and the type
of house. Income is represented by the median income per declaration, reflecting the disposable
income available for housing investments.

• Macroeconomic Factors: These encompass weighted average loan costs, employment rates,
migration patterns, and inflation rates. Employment rates are provided at the provincial level,
and migration is analyzed separately for Belgian and non-Belgian populations to discern their
distinct impacts on the housing market.

Given the comprehensive dataset, including house prices per city, this study will employ statistical
methods to evaluate the relationships between these variables and average house prices. By understand-
ing these correlations, policymakers, investors, and stakeholders can make more informed decisions in
the housing sector. The results of this analysis are expected to shed light on the significant drivers of
housing prices and provide actionable insights for economic planning and real estate investment.

2 Preparation of the dataset:

We combined all datasets to get a panel dataset containing all necessary variables of the analysis.

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3 Descriptive statistics:

Table 1: Descriptive Statistics for Continuous Variables

Variable Minimum Q1 Median Mean Q3 Maximum NA’s
Median Price (2-3-4+ facades) 125,000 176,250 231,750 226,701 268,250 417,750 33
Median Price (2-3 facades) 107,000 160,000 218,000 208,643 249,625 339,500 48
Median Price (4+ facades) 164,000 225,625 298,750 284,221 321,875 475,000 106
Median Price (apartments) 125,000 135,188 151,850 154,317 169,625 197,500 84
Employment Rate 0.5682 0.6300 0.6926 0.6832 0.7321 0.7921 0
Income 10,939 16,894 19,017 18,625 20,682 25,419 0
Inflation 0.003 0.010 0.021 0.018 0.023 0.035 0
Migrants (Belgian) -13,457 -11,731 -11,010 -10,548 -10,327 -5,457 0
Migrants (Non-Belgian) 46,094 54,294 58,171 60,570 67,242 84,926 0
Weighted Average Loan Cost 1.454 1.585 1.870 2.229 2.985 3.451 0

4 Correlation Analysis :

Table 2: Correlations Among Key Variables with P-values

Variable 1 2 3 4 5 6 7 8 9 10
1. Median Price (2-3-4+ facades) 1.00 0.96** 0.85** 0.26 0.46** 0.38** 0.03 -0.05 0.02 -0.27*
NA (0.00) (5.27e-08) (0.07) (2.16e-06) (1.04e-04) (0.77) (0.64) (0.83) (0.01)
2. Median Price (2-3 facades) 1.00 0.89** 0.26 0.42** 0.21 0.02 -0.05 0.00 -0.33**
NA (1.20e-09) (0.07) (8.51e-05) (0.05) (0.85) (0.68) (0.99) (0.00)
3. Median Price (4+ facades) 1.00 0.55* 0.80** 0.77** 0.01 -0.16 0.04 -0.41**
NA (0.03) (1.07e-06) (3.55e-06) (0.94) (0.43) (0.85) (0.04)
4. Median Price (apartments) 1.00 0.49** 0.50** -0.10 -0.13 -0.12 -0.53**
NA (0.00) (0.00) (0.49) (0.37) (0.40) (1.02e-04)
5. Employment Rate 1.00 0.66** -0.00 0.01 0.02 -0.18
NA (0.00) (0.96) (0.95) (0.80) (0.04)
6. Income 1.00 -0.13 -0.08 -0.12 -0.38**
NA (0.13) (0.35) (0.19) (9.21e-06)
7. Inflation 1.00 -0.07 0.56** 0.33**
NA (0.45) (2.49e-12) (1.08e-04)
8. Migrants (Belgian) 1.00 0.39** 0.31**
NA (3.66e-06) (2.78e-04)
9. Migrants (Non-Belgian) 1.00 0.23
NA (0.01)
10. Weighted Average Loan Cost 1.00
NA
* p < .05, ** p < .01

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Interpretations
1. **Median Price (2-3-4+ facades)** - Strong positive correlation with Median Price (2-3 facades)
(r = 0.96, p < 0.01). - Strong positive correlation with Median Price (4+ facades) (r = 0.85, p <
0.01).
- Moderate positive correlation with Employment Rate (r = 0.46, p < 0.01). - Moderate positive cor-
relation with Income (r = 0.38, p < 0.01). - Negative correlation with Weighted Average Loan Cost
(r = −0.27, p < 0.05). - Other correlations are not significant.

2. **Median Price (2-3 facades)** - Strong positive correlation with Median Price (4+ facades) (r =
0.89, p < 0.01). - Moderate positive correlation with Employment Rate (r = 0.42, p < 0.01). - Negative
correlation with Weighted Average Loan Cost (r = 0.33, p < 0.01). - Other correlations are not sig-
−
nificant.

3. **Median Price (4+ facades)** - Moderate positive correlation with Median Price (apartments)
(r = 0.55, p < 0.05). - Strong positive correlation with Employment Rate (r = 0.80, p < 0.01). - Strong
positive correlation with Income (r = 0.77, p < 0.01). - Negative correlation with Weighted Average
Loan Cost (r = −0.41, p < 0.01). - Other correlations are not significant.

4. **Median Price (apartments)** - Moderate positive correlation with Employment Rate (r = 0.49, p <
0.01). - Moderate positive correlation with Income (r = 0.50, p < 0.01). - Negative correlation with
Weighted Average Loan Cost (r = −0.53, p < 0.01). - Other correlations are not significant.

5. **Employment Rate** - Strong positive correlation with Income (r = 0.66, p < 0.01). - Other
correlations are not significant.

6. **Income** - Moderate negative correlation with Weighted Average Loan Cost (r = 0.38,
− p < 0.01).
- Other correlations are not significant.

7. **Inflation** - Moderate positive correlation with Migrants (Non-Belgian) (r = 0.56, p < 0.01).
- Moderate positive correlation with Weighted Average Loan Cost (r = 0.33, p < 0.01). - Other corre-
lations are not significant.

8. **Migrants (Belgian)** - Moderate positive correlation with Migrants (Non-Belgian) (r = 0.39, p <
0.01). - Moderate positive correlation with Weighted Average Loan Cost (r = 0.31, p < 0.01). - Other
correlations are not significant.

9. **Migrants (Non-Belgian)** - No significant correlations with other variables.

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10. **Weighted Average Loan Cost** - Negative correlation with Median Price (apartments) (r =
—0.53, p < 0.01). - Negative correlation with Median Price (4+ facades) (r = 0.41, p < 0.01). -
Negative correlation with Median Price (2-3-4+ facades) (r = 0.27,
− p < 0.05). - Other correlations are
not significant.

5 The impact of micro and macro economic variables on the

price of All Houses with 2, 3, 4 or More Facades (excluding
Apartments):

Table 3: Oneway (Individual) Effect Within Model

Variable Estimate Std. Error t-value p-value
Employment Rate 1.1025 ×10 2.5439 105
5
0.4334 0.6659
Income Per Number of Habits 12.379 3.9121 3.1642 0.0022**
Inflation 5.4669 ×10 3.4877 105
5
1.5675 0.1209
Weighted Average Loan Cost -9836.5 6850.9 -1.4358 0.1549
Migrants (Non-Belgian) -0.2233 0.3091 -0.7224 0.4721
Migrants (Belgian) 3.6806 1.3529 2.7205 0.0080**
Note. R = 0.581, Adjusted R = 0.500, F (6, 82) = 18.99, p
2 2
< 0.001.
* p < .05, ** p < .01, *** p < .001

Interpretations
The table above shows the results of a one-way (individual) effect within model analyzing the impact of
various predictors on the median price of houses with 2, 3, or 4 or more facades, excluding apartments.
The following interpretations can be made:

1. **Employment Rate:** - Estimate: 1.1025 ×105 - The effect of Employment Rate on the me-
dian price is positive but not statistically significant (t = 0.4334, p = 0.6659).

2. **Income Per Number of Habits:** - Estimate: 12.379 - Income per number of habits has a positive
and statistically significant effect on the median price (t = 3.1642, p = 0.0022).

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3. **Inflation:** - Estimate: 5.4669 ×105 - Inflation has a positive effect on the median price but
is not statistically significant (t = 1.5675, p = 0.1209).

4. **Weighted Average Loan Cost:** - Estimate: -9836.5 - The effect of the weighted average loan
cost on the median price is negative and not statistically significant (t = −1.4358, p = 0.1549).

5. **Migrants (Non-Belgian):** - Estimate: -0.2233 - The effect of non-Belgian migrants on the median
price is negative and not statistically significant (t = −0.7224, p = 0.4721).

6. **Migrants (Belgian):** - Estimate: 3.6806 - The effect of Belgian migrants on the median price
is positive and statistically significant (t = 2.7205, p = 0.0080).

Model Summary: - The model explains approximately 58.1% of the variance in the median price
(R2 = 0.581). - The adjusted R2 value is 0.500, indicating a good fit. - The overall model is statistically
significant (F (6, 82) = 18.99, p < 0.001).

6 The impact of micro and macro economic variables on the

Price of Houses with 2 or 3 Facades (Terraced/Semi-
Detached):

Table 4: Oneway (Individual) Effect Within Model for Median Price of Houses with 2 or 3 Facades
Variable Estimate Std. Error t-value p-value
Employment Rate 1.0675 ×10 2.2668 10
5 5
0.4709 0.6392
Income Per Number of Habits 10.110 3.5916 2.8150 0.0063**
Inflation 8.6961 ×10 3.2834 10
5 5
2.6485 0.0100**
Weighted Average Loan Cost -12183.0 6272.9 -1.9421 0.0561.
Migrants (Non-Belgian) -0.5841 0.2870 -2.0349 0.0456*
Migrants (Belgian) 4.4207 1.2267 3.6038 0.0006***
Note. R = 0.609, Adjusted R = 0.536, F (6, 70) = 18.14, p < 0.001.
2 2

* p < .05, ** p < .01, *** p < .001

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Interpretations
The table above shows the results of a one-way (individual) effect within model analyzing the impact
of various predictors on the median price of houses with 2 or 3 facades, including terraced and semi-
detached houses. The following interpretations can be made:

1. **Employment Rate:** - Estimate: 1.0675 ×105 - The effect of Employment Rate on the me-
dian price is positive but not statistically significant (t = 0.4709, p = 0.6392).

2. **Income Per Number of Habits:** - Estimate: 10.110 - Income per number of habits has a positive
and statistically significant effect on the median price (t = 2.8150, p = 0.0063).

3. **Inflation:** - Estimate: 8.6961 ×105 - Inflation has a positive and statistically significant ef-
fect on the median price (t = 2.6485, p = 0.0100).

4. **Weighted Average Loan Cost:** - Estimate: -12183.0 - The effect of the weighted average loan
cost on the median price is negative and marginally significant (t = −1.9421, p = 0.0561).

5. **Migrants (Non-Belgian):** - Estimate: -0.5841 - The effect of non-Belgian migrants on the median
price is negative and statistically significant (t = −2.0349, p = 0.0456).

6. **Migrants (Belgian):** - Estimate: 4.4207 - The effect of Belgian migrants on the median price
is positive and statistically significant (t = 3.6038, p = 0.0006).

Model Summary: - The model explains approximately 60.9% of the variance in the median price
(R2 = 0.609). - The adjusted R2 value is 0.536, indicating a good fit. - The overall model is statistically
significant (F (6, 70) = 18.14, p < 0.001).

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7 The impact of micro and macro economic variables on the
Price of Houses with 4 or More Facades (Detached Houses):

Table 5: Oneway (Individual) Effect Within Model for Median Price of Houses with 4 or More Facades
Variable Estimate Std. Error t-value p-value
Employment Rate -3.5689 ×10 7.4232 105
5
-0.4808 0.6372
Income Per Number of Habits 57.049 15.742 3.6239 0.0023**
Inflation 1.0590 ×10 6
1.1298 106 0.9374 0.3625
Weighted Average Loan Cost 53959.0 26147.0 2.0637 0.0557.
Migrants (Non-Belgian) 1.3471 1.3001 1.0362 0.3155
Migrants (Belgian) -2.1349 5.1950 -0.4109 0.6866
Note. R = 0.675, Adjusted R = 0.493, F (6, 16) = 5.55, p =
2 2
0.0028.
* p ¡ .05, ** p ¡ .01, *** p ¡ .001

Interpretations
The table above shows the results of a one-way (individual) effect within model analyzing the impact of
various predictors on the median price of houses with 4 or more facades, specifically detached houses.
The following interpretations can be made:

1. **Employment Rate:** - Estimate: -3.5689 × 105 - The effect of Employment Rate on the me-
dian price is negative but not statistically significant (t = −0.4808, p = 0.6372).

2. **Income Per Number of Habits:** - Estimate: 57.049 - Income per number of habits has a positive
and statistically significant effect on the median price (t = 3.6239, p = 0.0023).

3. **Inflation:** - Estimate: 1.0590 ×106 - Inflation has a positive effect on the median price but
is not statistically significant (t = 0.9374, p = 0.3625).

4. **Weighted Average Loan Cost:** - Estimate: 53959.0 - The effect of the weighted average loan
cost on the median price is positive and marginally significant (t = 2.0637, p = 0.0557).

5. **Migrants (Non-Belgian):** - Estimate: 1.3471 - The effect of non-Belgian migrants on the me-
dian price is positive but not statistically significant (t = 1.0362, p = 0.3155).

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6. **Migrants (Belgian):** - Estimate: -2.1349 - The effect of Belgian migrants on the median price is
negative but not statistically significant (t = −0.4109, p = 0.6866).

Model Summary: - The model explains approximately 67.5% of the variance in the median price
(R2 = 0.675). - The adjusted R2 value is 0.493, indicating a moderate fit. - The overall model is
statistically significant (F (6, 16) = 5.55, p = 0.0028).

8 The impact of micro and macro economic variables on the

Price of Apartments:

Table 6: Oneway (Individual) Effect Within Model for Median Price of Apartments
Variable Estimate Std. Error t-value p-value
Employment Rate -1.1789 ×10 2.2069 105
5
-0.5342 0.5964
Income Per Number of Habits 9.7558 3.8765 2.5167 0.0163*
Inflation 4.7196 ×105 3.2470 105 1.4535 0.1545
Weighted Average Loan Cost -5331.5 6254.2 -0.8525 0.3994
Migrants (Non-Belgian) -0.3102 0.2857 -1.0858 0.2846
Migrants (Belgian) 1.6445 1.3184 1.2474 0.2201
Note. R = 0.502, Adjusted R = 0.367, F (6, 37) = 6.21, p =
2 2
0.0001.
* p < .05, ** p < .01, *** p < .001

Interpretations
The table above shows the results of a one-way (individual) effect within model analyzing the impact of
various predictors on the median price of apartments. The following interpretations can be made:

1. **Employment Rate:** - Estimate: -1.1789 × 105 - The effect of Employment Rate on the me-
dian price is negative but not statistically significant (t = −0.5342, p = 0.5964).

2. **Income Per Number of Habits:** - Estimate: 9.7558 - Income per number of habits has a positive
and statistically significant effect on the median price (t = 2.5167, p = 0.0163).

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3. **Inflation:** - Estimate: 4.7196 ×105 - Inflation has a positive effect on the median price but
is not statistically significant (t = 1.4535, p = 0.1545).

4. **Weighted Average Loan Cost:** - Estimate: -5331.5 - The effect of the weighted average loan
cost on the median price is negative and not statistically significant (t = −0.8525, p = 0.3994).

5. **Migrants (Non-Belgian):** - Estimate: -0.3102 - The effect of non-Belgian migrants on the median
price is negative but not statistically significant (t = −1.0858, p = 0.2846).

6. **Migrants (Belgian):** - Estimate: 1.6445 - The effect of Belgian migrants on the median price
is positive but not statistically significant (t = 1.2474, p = 0.2201).

Model Summary: - The model explains approximately 50.2% of the variance in the median price
(R2 = 0.502). - The adjusted R2 value is 0.367, indicating a moderate fit. - The overall model is
statistically significant (F (6, 37) = 6.21, p = 0.0001).

9 Conclusion
This study investigated the impact of both microeconomic and macroeconomic variables on average
house prices across various cities. The analysis revealed several key findings:

• Income: Income per number of habits has a consistently positive and statistically significant
effect on median house prices across different types of housing. This highlights the crucial role of
disposable income in determining housing affordability and demand.

• Employment Rate: Although the employment rate showed positive correlations with house
prices, its effect was not statistically significant in most cases. This suggests that while employment
contributes to economic stability, it may not be a direct determinant of house prices.

• Inflation: Inflation had a positive but not consistently significant impact on house prices. The
relationship between inflation and house prices indicates that as the cost of goods and services
increases, house prices tend to rise, although other factors may moderate this effect.

• Weighted Average Loan Cost: The weighted average loan cost generally had a negative impact
on house prices, though this effect was not always statistically significant. Higher loan costs can
reduce housing affordability by increasing the cost of financing.

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 • Migration: The impact of migration varied between Belgian and non-Belgian migrants. Belgian
migrants had a positive and statistically significant effect on house prices, while non-Belgian mi-
grants showed a negative but not consistently significant effect. This could reflect differences in
housing demand patterns between these groups.

Overall, the model explained a significant portion of the variance in house prices, with adjusted R-
squared values indicating a good fit. These findings provide valuable insights for policymakers and
investors, emphasizing the importance of income levels and loan costs in shaping housing market dynam-
ics. Future research could explore additional variables and consider the long-term impacts of economic
policies on housing affordability.

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