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House prices, housing development costs, and the supply of new single-family housing in German counties and cities

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  • Oliver W. Lerbs

Abstract

This paper investigates the determinants of new single-family housing supply in local housing markets in Germany, using construction permits as the dependent variable. The empirical estimations are based on a panel data-set for 413 German counties and cities spanning the time period of 2004-2010. Employing dynamic panel data analysis, the findings suggest that the local ratio of existing home prices to housing construction costs and past local permit rates act as important drivers of new local housing investment. The average long-run price elasticity of new single-family housing supply is considerably less than one, but sizeable differences exist across the urban hierarchy.

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  • Oliver W. Lerbs, 2014. "House prices, housing development costs, and the supply of new single-family housing in German counties and cities," Journal of Property Research, Taylor & Francis Journals, vol. 31(3), pages 183-210, September.
    • Handle: RePEc:taf:jpropr:v:31:y:2014:i:3:p:183-210
    DOI: 10.1080/09599916.2014.893249
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    2. Kajuth, Florian, 2021. "Land leverage and the housing market: Evidence from Germany1," Journal of Housing Economics, Elsevier, vol. 51(C).
    3. Panagiotidis, Theodore & Printzis, Panagiotis, 2020. "What is the investment loss due to uncertainty?," Global Finance Journal, Elsevier, vol. 45(C).
    4. Lerbs, Oliver & Hiller, Norbert, 2015. "Aging and Urban House Prices," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113136, Verein für Socialpolitik / German Economic Association.
    5. Martin Micheli & Jan Rouwendal & Jasper Dekkers, 2019. "Border Effects in House Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 47(3), pages 757-783, September.
    6. Seidel, Tobias & Wickerath, Jan, 2020. "Rush hours and urbanization," Regional Science and Urban Economics, Elsevier, vol. 85(C).
    7. repec:zbw:rwirep:0511 is not listed on IDEAS
    8. Cardullo, Gabriele & Sechi, Agnese, 2023. "Local Labor Markets with Non-homothetic Preferences," IZA Discussion Papers 16533, Institute of Labor Economics (IZA).
    9. Martin Micheli & Jan Rouwendal & Jasper Dekkers, 2014. "Border Eff ects in House Prices," Ruhr Economic Papers 0511, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    10. Haertel, Thomas & Hamburg, Britta & Kusin, Vladimir, 2022. "The macroeconometric model of the Bundesbank revisited," Technical Papers 01/2022, Deutsche Bundesbank.
    11. Hiller, Norbert & Lerbs, Oliver W., 2016. "Aging and urban house prices," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 276-291.
    12. Lozano Navarro, Francisco-Javier, 2015. "Elasticidad precio de la oferta inmobiliaria en el Gran Santiago [Housing supply elasticity in Greater Santiago]," MPRA Paper 65012, University Library of Munich, Germany.
    13. Dirk Drechsel & Stefan Neuwirth, 2016. "Taming volatile high frequency data with long lag structure: An optimal filtering approach for forecasting," KOF Working papers 16-407, KOF Swiss Economic Institute, ETH Zurich.
    14. Kajuth, Florian, 2020. "The German housing market cycle: Answers to FAQs," Discussion Papers 20/2020, Deutsche Bundesbank.

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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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