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Housing Market Convergence: Evidence from Germany

Author

Listed:
  • Umut Unal

    (Research Institute for Labour and Social Affairs (RILSA))

  • Bernd Hayo

    (Philipps-Universitaet Marburg)

  • Isil Erol

    (Ozyegin University)

Abstract

This paper analyses the convergence pattern of German housing prices and rents, employing a new dataset covering the country’s administrative districts. In addition to conventional tests for 𠛽-convergence and 𠜎-convergence, we apply Phillips and Sul’s (2007) approach to allow for the various heterogeneity and transitional dynamics across districts. Our results reveal no evidence of convergence across Germany or within states; instead, we discover widespread evidence of divergence and inter-state convergence, as well as support for the existence of convergence clubs. At the federal level, we identify club numbers ranging from 11 (for existing flat prices) to five (for new flat rents). At the state level, the estimated number of clubs is generally lower, ranging from zero to six.

Suggested Citation

  • Umut Unal & Bernd Hayo & Isil Erol, 2022. "Housing Market Convergence: Evidence from Germany," MAGKS Papers on Economics 202244, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:202244
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    References listed on IDEAS

    as
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    6. Umut Unal & Bernd Hayo & Isil Erol, 2022. "The Effect of Immigration on the German Housing Market," MAGKS Papers on Economics 202238, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
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    More about this item

    Keywords

    Convergence; Germany; Housing prices; district-level data; convergence clubs;
    All these keywords.

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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