The Problem of Competition on Real Estate Market on the Example of the Local Housing Market in Olsztyn

In the economic theory, competition is considered to be a fundamental principle of the free market. Due to the competition, customers get lower prices, better service quality, more and more choices. The competition in the real estate market is a very important factor in its development. Buying or selling real estate is often one of the most important financial transactions, which require the purchaser. With the reference to the above, the participants of the real estate market need to analyse a number of transactions and do a detailed understanding of the market before making a decision and finding a deal that meets all the expectations which will not be diverging significantly from remaining offers functioning in the given area of the market. The phenomenon of competition is very advantageous for buyers of a real estate, because it shows a wide range of various possibilities which one should consider before making a final choice.

Times of crisis trigger a tendency of the growing competition in the property market, what results in a decrease in real estate prices. This article brings up the issue of price and non-price competition on the real estate market and the influence which it exerts on the decision of the purchaser. The aim of this paper is to present the phenomenon of the competition at three levels (levels), by examining what relationship occurs between the entities functioning on the market, what occurs between entities and objects, and how the entities, i.e. individual real estate, compete with each other. This study will be conducted with methods of statistical analysis of the market, however Herfindahl-Hirschman Index will be used to measure competition on the local real estate market.