Testing for Endogenous Gentrification in Copenhagen: A Quantitative Analysis of Proximity-Driven Price Dynamics and Socioeconomic Change in the Housing Market of Copenhagen From 1988 to 2016

Abstract

The purpose of this research is to examine whether proximity to high-priced neighborhoods in Copenhagen drives patterns of gentrification, as evidenced by housing price increases and socioeconomic shifts from 1988 to 2016. It investigates if these observed transformations reflect endogenous gentrification processes, where housing demand from higher-priced neighborhoods spills into lower-priced adjacent neighborhoods. The study employs a quantitative, empirical methodology inspired by Guerrieri et al. (2013), applying various regressions using neighborhood-level data on housing prices and demographic indicators of neighborhoods in Copenhagen that are within a 15-kilometer radius of Rådhuspladsen. This is supported by mapping of historical square meter prices for the 563 relevant neighborhoods in Copenhagen, enabling detailed examination of proximity effects and urban transformation. This study finds that Copenhagen’s housing market transitioned from a fragmented spatial structure in 1988 to a more monocentric one in 2016. Moreover, it provides significant evidence of within-city variation, and that poorer neighborhoods located near wealthier areas experienced greater housing price appreciation than neighborhoods located farther away, consistent with endogenous gentrification dynamics. However, accompanying socioeconomic shifts related to proximity to wealth were less consistent, in part due to data constraints. Nonetheless, the analysis finds clear patterns of Inner-City gentrification, with square meter prices in central neighborhoods evolving from among the lowest to the highest levels, and a significant increase in the concentration of high-income residents within 5-kilometers of Rådhuspladsen. Overall, this research contributes to gentrification literature with its stringent approach to empirically testing the presence of endogenous gentrification in Copenhagen. In addition, it validates the city's transformation through quantitative modelling and spatial analysis, thereby bridging a gap in existing literature, which beforehand was predominantly based on qualitative data.