Real Estate Market Dynamics in the Municipality of Oporto

Abstract

The housing configuration in a given area generally reflects similarities in terms of structural, location and neighborhood characteristics, indicating the formation of distinct housing sub markets. This paper aims to identify the existence and evolution of housing sub-markets in the municipality of Oporto in 2019 and 2022. These sub-markets were identified with the help of the recent methodology of hierarchical cluster analysis with contiguity restrictions. Whereas traditional clustering techniques have long been used in market segmentation studies, those studies tend to incorporate location/neighborhood restrictions in an ad hoc form. Contiguity restricted cluster analysis addresses this issue directly. Results identified three well-defined and relatively stable sub-markets. Their delimitation, complemented by an analysis of the characteristics that define them, provides valuable information for homeowners, municipalities, lenders, and real estate investors and developers