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Urban and Peri-Urban Residential Rental Markets in Wallonia: Similar or Different?

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Abstract

Residential rents are analysed in the Walloon region in Belgium. In this region, affected by urban sprawl, households rent accommodation in urbanised areas as well as in their peripheries. While there is no statistical difference between the average observed rents per square meter in urban agglomerations and suburbs, does it mean that these areas compose a single market with identical rent determinants? Or that the same level of rents is determined by different drivers? The paper analyses the regional territorial structure and aims at determining the geographical rental submarkets based on urban / peri-urban delimitation. Traditional ordinary least squares (OLS) and geographically weighted regression (GWR) techniques are applied. With the latter method, the spatial autocorrelation in the residuals decreases, but remains significant. Particular attention is payed to the spatial distribution of the GWR coefficients. The Chow test and the weighted standard error provide an evidence of the existence of spatial-structural submarkets in the agglomerations and in the peri-urban areas in the biggest residential urban complexes of the region. The calculated market rent of a hypothetical standardized dwelling reveals a substantial dissimilarity between two areas: the rent of a typical dwelling is higher in peri-urban zones, up to 43.5% according to the OLS and up to 17.7% according to the GWR. With more recent dataset, we found that this tendency, which contradicts the classical urban theory, increases in time.

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Notes

  1. Décret relatif au bail d’habitation

  2. The other term applied in the literature is “market basket value” (see e.g. Borst 2014).

  3. For the path-dependency of low-income neighbourhood trajectories and increasing poverty concentration in Dutch cities, see Zwiers et al. (2017).

  4. At the same time, the suburbanisation of working class in Belgium emerges as well. Thus, close to one third of those who leave the Brussels capital region to move to Flanders and Wallonia between 2005 and 2013 belong to the lowest-income categories (De Laet 2018).

  5. The data applied in Van Hecke et al. (2009) came from the census 2001. In Belgium, this classification is still in use. The delimitation of residential urban complexes with more recent data is a complicated issue.

  6. According to Voisin et al. (2010), in the hedonic price model, the historical-morphological division is better than the administrative division.

  7. Administrative arrondissement in Wallonia is a relatively large area, which usually includes urban, suburban and rural municipalities. Wallonia is divided in 20 arrondissements.

  8. In several cases, the name of a central city is used also as the name of an arrondissement and the name of a province. For example, there exist the city of Namur, the arrondissement of Namur and the province of Namur.

  9. Between 2012 and 2016, the inflation based on the Consumption Price Index is 4.0% and the inflation based on the Health Index (applied for rents indexation) is 4.9%.

  10. For interpolation, the IDW (Inverse Distance Weighted) method is applied with squared distances and 15 neighbours.

  11. The influence of neighbouring observations decreases with Euclidian distance from the point of observation. The GWR model is constructed with fixed kernel type and the selection of bandwidth with Akaike Information Criterion. The best bandwidth size is 70 m.

  12. This is also called « Mietspiegel » in Germany or “Loyers de reférence” in France (Paris).

  13. Namely: housing type, housing age, living area, etc.

  14. Parliament of Wallonia, Compte-rendu intégral N° 20 (2015–2016) - Plenary session Wednesday 22nd June 2016, page 103. Translation of the authors.

  15. It is important to note that no consistent statistical monitoring of rent existed in the region at that time. The rent observatory was poorly developed compared to Brussels or neighbouring countries. Moreover, the expansion of the rental sector is a quite recent phenomenon in Wallonia, where nearly 70% of households were owners until the beginning of the 2000s.

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Authors and Affiliations

  1. Centre for Sustainable Housing Studies of Wallonia (CEHD), Rue de l’Ecluse 21, 6000, Charleroi, Belgium

    Marko Kryvobokov & Sébastien Pradella

  2. Department of Finance, Insurance and Real Estate, Laval University, Faculty of Business Administration, Pavillon Palasis-Prince, 2325 Rue de la Terrasse, Québec, Canada

    François Des Rosiers

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  1. Marko Kryvobokov
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Appendix

Appendix

In the GWR model, there are negative estimates for NbBath (99 observations) and NbWC (175 observations). There are no cases, where both coefficients are negative.

The 99 observations with the negative estimates for NbBath are geographically concentrated to the west of the Charleroi RUC and to the east of the Liège RUC. These observations have lesser living area than the average (74 m2 versus 83 m2). Among these observations, only 2 have no bathrooms and 6% have at least two bathrooms (this proportion corresponds to the average).

Among the extreme cases of the negative coefficients for NbBath that are lesser than −0.05 (17 observations), almost half (7 observations) have at least two WC. Our explanation is that the negative GWR coefficients for NbBath “compensates” too strong positive impact of the coefficients for NbWC, especially for the cases of combined bathroom/WC. The information if a WC is combined with a bathroom or not is absent in the datasets.

The 175 observations with the negative GWR estimates for NbWC are geographically located in three areas: in the city of Liège (88 observations), in the centre of Brabant Walloon (23 observations in Ottignies-Louvain-la-Neuve and 19 observations in its neighbouring Wavre) and, to lesser degree, in Mons. These dwellings are not large (72 m2 on average). Among them, only 3 observations have no WC and 8% have at least two bathrooms (this proportion is a bit higher than the average).

As for the cases with extremely negative coefficients for NbWC that are lesser than −0.05 (90 observations), there are many apartments (73%), the proportion of dwellings with at least two bathrooms (8%) is a bit higher than the average and the proportion of dwellings with at least two WC is similar to the average. Also, there are 7 observations with at least two bathrooms and 17 observations with at least two WC located in Liège, Ottignies-Louvain-la-Neuve and Wavre. In line with the aforementioned explanation (for NbBath), the negative GWR coefficients for NbWC can “compensate” too strong positive impact of the coefficients for NbBath, especially for the cases of combined bathroom/WC. The additional hypothesis is that in the UCL university campus (the biggest in Wallonia) located in Ottignies-Louvain-la-Neuve, as well as in the accommodations rented by students and researchers in the proximity, bathrooms and/or WC can be shared by several residential units. This can refer to the first as well as to the second bathroom or WC.

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Kryvobokov, M., Pradella, S. & Rosiers, F.D. Urban and Peri-Urban Residential Rental Markets in Wallonia: Similar or Different?. Appl. Spatial Analysis 13, 461–487 (2020). https://doi.org/10.1007/s12061-019-09312-8

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