| Résumé |
This paper estimates the discontinuity in house prices at Luxembourg’s border with its three neighbouring countries, Belgium, France and Germany. We use propensity score matching techniques and representative survey data on house valuations by households living in Luxembourg or its surrounding regions. Using a sample of properties close to the border, we find a large quality-adjusted Luxembourg housing premium, with substantial heterogeneity by border segment. Property prices on the Luxembourg side of the border are 35% higher than on the German side, and 111%-112% higher than on the French and Belgian sides. Prices on the Luxembourg side are similar along all three border segments, implying that the heterogeneity in the estimated discontinuities mainly reflects differences in prices on the neighbouring-country side, which may in turn reflect both national institutional differences and local market conditions. Overall, the estimated discontinuities persist after controlling for intrinsic property characteristics and key geographical determinants.
Keywords: Property prices, cross-border, border discontinuity, housing policies; housing wealth. JEL classifications: R31; R32; R23; J61.
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