Long-term dependence of housing prices and construction costs in Eastern Poland

The main purpose of the study is to verify the hypothesis on the occurrence of a long-term relationship between the average prices of 1m2 UFA (i.e. Usable Floor Area) and the construction costs of residential real estate per 1m2 for selected 5 cities of Eastern Poland (Białystok, Kielce, Lublin, Olsztyn & Rzeszów). The panel model for cointegrated variables and panel cointegration tests are the tools of the analysis. On the basis of the econometric model constructed, the long-term elasticity coefficient, which shows how average prices of flats change (i.e. the price of 1m2 UFA) in selected cities of Eastern Poland as a result of changes in their production costs, was estimated.