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Fundamental Determinants of Real Estate Prices: A Panel Study of German Regions

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Abstract

This paper aims at establishing empirical facts on the fundamental determinants of real estate prices. It contributes to the literature by analysing a unique panel dataset covering a wide range of real estate market data and other economic variables for nearly 100 German cities. Several robust fundamental determinants are identified, among them the supply-side factors of construction activity and housing stock as well as the demand-side factors of apartment rents, market size, age structure, local infrastructure and rental prices. Results suggest that these factors are robustly linked to fundamental real estate prices and thus can be used to detect misalignments of market prices.

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Acknowledgements

We are grateful to BulwienGesa AG for providing the real estate data analysed in this paper. Participants in the workshop “Real Estate Forecasting" at the Helmut-Schmidt-University, Hamburg, in the international conference "Real Estate Economics" at the German Institute for Economic Research (DIW), Berlin, in the intenrational Workshop "Immobilienökonomie", University of Duisburg-Essen, and in the international conference "The Excessive Imbalances Procedure (EIP): How to Undertake Surveillance on Housing Markets?“, European Commission, Brussels, and an anonymous referee provided helpful comments.

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Authors and Affiliations

  1. Department of Economics, Chair for Macroeconomics, University of Duisburg-Essen, Universitätsstraße 12, 45117, Essen, Germany

    Ansgar Belke

  2. Centre for European Policy Studies (CEPS), 1 Place du Congres, B-1000, Brussels, Germany

    Ansgar Belke

  3. Institute for the Study of Labor (IZA), Schaumburg-Lippe-Strasse 5-9, D-53113, Bonn, Germany

    Ansgar Belke

  4. German Development Institute (DIE), Tulpenfeld 6, D-53113, Bonn, Germany

    Jonas Keil

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Correspondence to Ansgar Belke.

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Belke, A., Keil, J. Fundamental Determinants of Real Estate Prices: A Panel Study of German Regions. Int Adv Econ Res 24, 25–45 (2018). https://doi.org/10.1007/s11294-018-9671-2

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