Details
| Original language | English |
|---|---|
| Journal | German economic review |
| Early online date | 13 Dec 2023 |
| Publication status | E-pub ahead of print - 13 Dec 2023 |
Abstract
Over the last decade, German housing prices have increased unprecedentedly. Drawing on quality-Adjusted housing price data at the district level, we show that regional fundamentals explain up to two-Thirds of between-region and 77 to 87 percent of within-region variation in price growth. Price increases were driven mainly by co-movements in local demand fundamentals, notably population density and skill level. However, we further reveal systematic variation unrelated to fundamentals: overvaluation of top 7 cities, path dependency, and spatial spillovers. We infer that speculation, investor preference for liquid markets, and bounded rationality contributed substantially to the recent housing price boom in Germany.
Keywords
- Germany, housing market, regional disparities, rental prices
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
Sustainable Development Goals
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In: German economic review, 13.12.2023.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Regional Supply and Demand Fundamentals in the German Housing Price Boom
AU - Brausewetter, Lars
AU - Thomsen, Stephan L.
AU - Trunzer, Johannes
PY - 2023/12/13
Y1 - 2023/12/13
N2 - Over the last decade, German housing prices have increased unprecedentedly. Drawing on quality-Adjusted housing price data at the district level, we show that regional fundamentals explain up to two-Thirds of between-region and 77 to 87 percent of within-region variation in price growth. Price increases were driven mainly by co-movements in local demand fundamentals, notably population density and skill level. However, we further reveal systematic variation unrelated to fundamentals: overvaluation of top 7 cities, path dependency, and spatial spillovers. We infer that speculation, investor preference for liquid markets, and bounded rationality contributed substantially to the recent housing price boom in Germany.
AB - Over the last decade, German housing prices have increased unprecedentedly. Drawing on quality-Adjusted housing price data at the district level, we show that regional fundamentals explain up to two-Thirds of between-region and 77 to 87 percent of within-region variation in price growth. Price increases were driven mainly by co-movements in local demand fundamentals, notably population density and skill level. However, we further reveal systematic variation unrelated to fundamentals: overvaluation of top 7 cities, path dependency, and spatial spillovers. We infer that speculation, investor preference for liquid markets, and bounded rationality contributed substantially to the recent housing price boom in Germany.
KW - Germany
KW - housing market
KW - regional disparities
KW - rental prices
UR - http://www.scopus.com/inward/record.url?scp=85180072360&partnerID=8YFLogxK
U2 - 10.1515/ger-2023-0063
DO - 10.1515/ger-2023-0063
M3 - Article
AN - SCOPUS:85180072360
JO - German economic review
JF - German economic review
SN - 1465-6485
ER -