Determinants of Regional Disparities in Housing Prices: A Spatial Analysis of German Regions
DOI:
https://doi.org/10.17059/ekon.reg.2023-3-23Keywords:
spatial econometrics, German regions, housing market, housing costs, rental costs, determinants of housing costs, panel data spatial econometric models, weighting matrix, unemployment rate, migrationAbstract
Germany is characterised by heterogeneous regional development in various economic spheres, including housing markets. Differences in housing prices persist during decades, causing undesirable inequality, affecting migration and employment patterns. The purpose of this work is to identify regional factors which affect regional housing prices in Germany. The peculiarity of the study is the consideration of the spatial location of regions for analysing the influence of the characteristics of neighbouring regions. Based on data from 397 German regions for 2004-2019, spatial econometric panel data models are built, which consider both selling and rental prices. The following factors that affect demand in the housing market are used as determinants of housing prices: the unemployment rate, the balance of pendulum migration at the place of work and living, the share of employment, wages, the number of employees, gross regional product. The analysis findings revealed that factors that raise income for the population trigger an upsurge in demand and prices for housing. Conversely, opposite effects result in a decline in prices due to a decrease in demand. Moreover, it was verified that neighbouring regions mutually affect housing markets through pendulum migration and the creation of economic clusters with similar living standards and prices. Furthermore, changes in labour market metrics are crucial; unemployment, wages, and the number of workers in nearby regions have a significant influence on real estate prices in the area under examination. The study’s practical importance lies in the possibility of using its outcomes to develop regional and migration policies
References
Algieri, B. (2013). House Price Determinants: Fundamentals and Underlying Factors. Comparative Economic Studies, 55(2), 315–341. DOI: https://doi.org/10.1057/ces.2013.3
Bataleva, A. (2005). Apartment Price Structure: Prices of Supply and Prices of Deals. Trudi NGU, 22, 67–69. (In Russ.)
Belke, A. & Jonas, K. (2017). Fundamental Determinants of Real Estate Prices: A Panel Study of German Regions. Ruhr Economic Papers No. 731.
Borowiecki, K. J. (2009). The Determinants of House Prices and Construction: An Empirical Investigation of the Swiss Housing Economy. International Real Estate Review, 12(3), 193–220.
De Bruyne, K. & Van Hove, J. (2013). Explaining the spatial variation in housing prices: an economic geography approach. Applied Economics, 45(13), 1673–1689. DOI: https://doi.org/10.1080/00036846.2011.636021
Case, K. E. & Mayer, C. J. (1996). Housing Price Dynamics within a Metropolitan Area. Regional Science and Urban Economics, 26(3-4), 387–407.
Cohen, V. & Karpavičiūtė, L. (2017). The Analysis of the Determinants of Housing Prices. Independent Journal of Management & Production, 8(1), 49–63. DOI: https://doi.org/10.14807/ijmp.v8i1.521
Égert, B. & Mihaljek, D. (2007). Determinants of House Prices in Central and Eastern Europe. Comparative Economic Studies, 49(3), 367–388. DOI: https://doi.org/10.1057/palgrave.ces.8100221
Ge, X. J. (2009). Determinants of House Prices in New Zealand. Pacific Rim Property Research Journal, 15(1), 90–121. DOI: https://doi.org/10.1080/14445921.2009.11104273
Geng, N. (2018). Fundamental Drivers of House Prices in Advanced Economies. IMF Working Papers 2018/164. DOI: https://doi.org/10.5089/9781484367629.001
Glushchenko, K. & Bataleva, A. (1999). The Structure of Prices on Secondary Housing Market in Novosibirsk. Region: ekonomika i sotsiologiya [Region: Economics and Sociology], 4, 111–129. (In Russ.)
Hackelberg, F. & Hennig, D. (2019). Investing in German Real Estate. PricewaterhouseCooper GmbH, 58. Retrieved from: https://www.pwc.de/de/real-estate/studie-investing-in-german-real-estate-2018.pdf.
Hanink, D. M., Cromley, R. G. & Ebenstein, A. Y. (2010). Spatial Variation in the Determinants of House Prices and Apartment Rents in China. The Journal of Real Estate Finance and Economics, 45(2), 347–363. DOI: https://doi.org/10.1007/s11146-010-9262-3
Hort, K. (1998). The Determinants of Urban House Price Fluctuations in Sweden 1968–1994. Journal of Housing Economics, 7(2), 93–120. DOI: https://doi.org/10.1006/jhec.1998.0225
Kauffmann, A. & Nastansky, A. (2007). Property market indices for periods below one year in Germany. Zeitschrift Für Immobilienökonomie [German Journal of Property Research], 2, 55–74. (In Germ.)
Kauffmann, A. & Nastansky, A. (2019). Explorative Analyse Der Preise von Einfamilienhäusern Und Eigentumswohnungen in Deutschland [Exploratory analysis of the prices of single-family houses and condominiums in Germany]. Statistische Diskussionsbeiträge No. 52. (In Germ.)
Kauffmann, A. & Nastansky, A. (2022). Regionale Mieten in Deutschland: Explorative Analyse Der Mieten in Der Wiedervermietung [Regional rents in Germany: exploratory analysis of rents in re-letting]. Statistische Diskussionsbeiträge 54. (In Germ.)
Kholodilin, K. A., Michelsen, C. & Ulbricht, D. (2018). Speculative Price Bubbles in Urban Housing Markets. Empirical Economics, 55(4), 1957–1983.
Kholodilin, K., Menz, J.-O. & Siliverstovs, B. (2010). What Drives Housing Prices Down? Evidence from an International Panel. Journal of Economics and Statistics, 230(1), 59–76.
Lin Lee, C. (2009). Housing price volatility and its determinants. International Journal of Housing Markets and Analysis, 2(3), 293–308. DOI: https://doi.org/10.1108/17538270910977572
Lisitskaya, T. S. & Yurkina, E. A. (2016). The Irrational Components of the Real Estate Market. Vestnik Evraziyskoy Nauki [The Eurasian Scientific Journal], 2(33), 52–61. (In Russ.)
Lunkov, A. (2015). Spatial Panel Data Models for Real Estate. In: Matematicheskoe Modelirovanie v Ekonomike, Strakhovanii i Upravlenii Riskami [Mathematical Modeling in Economics, Insurance and Risk Management] (pp. 142-145). Saratov. (In Russ.)
Miller, H. J. (2004). Tobler’s First Law and Spatial Analysis. Annals of the Association of American Geographers, 94(2), 284–289.
Miller, N. G., Sklarz, M. & Thibodeau, T. G. (2005). The Impact of Interest Rates and Employment on Nominal Housing Prices. International Real Estate Review, 8(1), 27–43.
O’Donovan, B. & Rae, D. (1997). The determinants of house prices in New Zealand: An aggregate and regional analysis. New Zealand Economic Papers, 31(2), 175–198. DOI: https://doi.org/10.1080/00779959709544273
Semerikova, E. & Blokhina, A. (2020). Determinants of Regional Differences in Housing Prices: Spatial Analysis of German Regions. In: Sistemnoe modelirovanie sotsialno-ekonomicheskikh protsessov: trudy 43-y Mezhdunarodnoy nauchnoy shkoly-seminara [System modeling of social-economic processes: The Material 43-d International scientific school-seminar] (pp. 463-468). Voronezh: Istoki. (In Russ.)
Semerikova, E., Nastansky, A. & Blokhina, A. (2022). Convergence in German Regional Housing Markets. Ekonomicheskiy zhurnal VShE [HSE Economic Journal], 26(1), 120–144.
Sunde, T. & Muzindutsi, P.-F. (2017). Determinants of house prices and new construction activity: An empirical investigation of the Namibian housing market. The Journal of Developing Areas, 51(3), 389–407. DOI: https://doi.org/10.1353/jda.2017.0080
Tripathi, S. (2020). Macroeconomic Determinants of Housing Prices : A Cross Country Level Analysis. MPRA Paper No. 98089, 17.
Vizek, M. (2011). Short-Run and Long-Run Determinants of House Prices in Eastern and Western European Countries. Privredna Kretanja i Ekonomska Politika [Economic Trends and Economic Policy], 20(125), 27–60.
Wang, Y., Wang, S., Li, G., Zhang, H., Jin, L., Su, Y. & Wu, K. (2017). Identifying the determinants of housing prices in China using spatial regression and the geographical detector technique. Applied Geography, 79, 26–36. DOI: https://doi.org/10.1016/j.apgeog.2016.12.003.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Семерикова Елена Вячеславовна , Блохина Анастасия Олеговна , Настанский Андреас
This work is licensed under a Creative Commons Attribution 4.0 International License.
