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Fundamental determinants of real estate prices: A panel study of German regions

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  • Belke, Ansgar
  • Keil, Jonas

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 construction activity and housing stock as well as the demandside factors 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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  • Belke, Ansgar & Keil, Jonas, 2017. "Fundamental determinants of real estate prices: A panel study of German regions," Ruhr Economic Papers 731, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:731
    DOI: 10.4419/86788851
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    3. Brausewetter, Lars & Thomsen, Stephan L. & Trunzer, Johannes, 2022. "Explaining regional disparities in housing prices across German districts," IWH Discussion Papers 13/2022, Halle Institute for Economic Research (IWH).
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    5. Ales Melecky & Daniel Paksi, 2024. "Drivers of European housing prices in the new millennium: demand, financial, and supply determinants," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 51(3), pages 731-753, August.
    6. Reichle, Philipp & Fidrmuc, Jarko & Reck, Fabian, 2023. "The sharing economy and housing markets in selected European cities," Journal of Housing Economics, Elsevier, vol. 60(C).
    7. Peres Ofori, 2021. "Mortgage market and climate variability adaptation: evidence from the mortgage market in emerging cities," SN Business & Economics, Springer, vol. 1(12), pages 1-22, December.
    8. Emilia Janeczko & Joanna Budnicka-Kosior & Artur Dawidziuk & Małgorzata Woźnicka & Łukasz Kwaśny & Beata Fornal-Pieniak & Filip Chyliński & Anna Goljan, 2022. "Impact of Forest Landscape on the Price of Development Plots in the Otwock Region, Poland," Sustainability, MDPI, vol. 14(21), pages 1-17, November.
    9. Hanli Chen & Yu Zhang & Ningxin Zhang & Man Zhou & Heping Ding, 2022. "Analysis on the Spatial Effect of Infrastructure Development on the Real Estate Price in the Yangtze River Delta," Sustainability, MDPI, vol. 14(13), pages 1-22, June.
    10. Tripathi, Sabyasachi, 2019. "Macroeconomic Determinants of Housing Prices: A Cross Country Level Analysis," MPRA Paper 98089, University Library of Munich, Germany.
    11. David Mazáček & Jiří Panoš, 2022. "Key determinants of new residential real estate prices in Prague," FFA Working Papers 5.002, Prague University of Economics and Business, revised 11 Apr 2023.
    12. Jason R. Bailey & Davide Lauria & W. Brent Lindquist & Stefan Mittnik & Svetlozar T. Rachev, 2022. "Hedonic Models of Real Estate Prices: GAM and Environmental Factors," Papers 2210.14266, arXiv.org.
    13. Deller, Timo, 2022. "The Economic Upside of Green Real Estate Investments: Analyzing the Impact of Energy Efficiency on Building Valuation in the Residential Sector," Junior Management Science (JUMS), Junior Management Science e. V., vol. 7(3), pages 802-825.
    14. Nektarios A. Michail & George Thucydides, 2019. "The impact of foreign demand on Cyprus house prices," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 13(2), pages 48-71, December.
    15. Andreas Hendricks & Peter Lacoere & Erwin van der Krabben & Cynthia Oorschot, 2021. "Limits of Negotiable Developer Obligations," Sustainability, MDPI, vol. 13(20), pages 1-20, October.
    16. Engerstam, Sviatlana, 2020. "Macroeconomic determinants of apartment prices in Swedish and German cities," Working Paper Series 20/2, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    17. Christian Reiner & Robert Musil, 2023. "The regional variation of a housing boom. Disparities of land prices in Austria, 2000–2018 [Die regionale Differenzierung eines Immobilien-Booms. Disparitäten der Baulandpreise in Österreich, 2000–," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 43(1), pages 125-146, April.
    18. Alona Shmygel, 2022. "House Price Bubble Detection in Ukraine," IHEID Working Papers 22-2022, Economics Section, The Graduate Institute of International Studies.

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    More about this item

    Keywords

    real estate market; fundamental prices; regional data; panel study;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • 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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