Skip to main content
SpringerLink
Log in

Assessing Recent House Price Developments in Germany: An Overview

  • Chapter
  • First Online:
Monetary Policy, Financial Crises, and the Macroeconomy

  • 1328 Accesses

Abstract

Residential property prices in Germany started to increase markedly in 2010 amid exceptionally expansionary monetary policy conditions. Against the backdrop of concerns about an incipient overheating of the Germany housing market, this article reviews recent research on house price valuation with a focus on the quality of house price data for Germany and methodological issues. Due to the uncertainty attached to any single indicator, considering a range of statistical and regression-based indicators is advisable. With a view to the current low interest rate environment, evidence for Germany on the role of interest rates on housing markets is scarce. Available studies, however, indicate a non-negligible interest rate effect on residential property prices in Germany.

The views expressed are those of the author and do not necessarily reflect those of the European Central Bank. Comments from Sergio Nicoletti Altimari, Lorenzo Cappiello, Carsten Detken, Frank Heinemann, Paul Hiebert, Gerhard Illing and Christoffer Kok are highly appreciated.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 129.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    For a recent contribution see Jordà et al. (2015).

  2. 2.

    One notable approach to constructing a historical long-run data series for German house prices can be found in Knoll et al. (2014).

  3. 3.

    The standard valuation indicators typically abstract from supply-side factors like the housing stock or construction costs.

  4. 4.

    In the period from the mid-1990s to around 2010, the dotted price-to-rent ratio referring to new apartments in West Germany is below its sample average.

  5. 5.

    The house price series for Germany available from the OECD is an interpolated series since the longest time series for residential property prices in Germany dating back to 1975 is available at annual frequency. Most likely it is comprised of two or more individual series with different regional and sectoral coverage.

  6. 6.

    These results are based on studies which differ in the sample periods, estimation techniques and the definition of the relevant interest rate.

References

  • Agnello, L., & Schuknecht, L. (2009). Booms and busts in housing markets: Determinants and implications. Journal of Housing Economics, 20(3), 171–190.

    Article  Google Scholar 

  • An de Meulen, P., & Micheli, M. (2013). Droht eine Immobilienpreisblase in Deutschland? Wirtschaftsdienst, 93(8), 539–544.

    Article  Google Scholar 

  • Bauer, T., Feuerschütte, S., Kiefer, M., An de Meulen, P., Micheli, M., Schmidt, T., & Wilke, L. (2013). Ein hedonischer Immobilienpreisindex auf Basis von Internetdaten: 2007–2011. AStA – Wirtschafts- und Sozialstatistisches. Archiv, 7(1), 5–30.

    Article  Google Scholar 

  • Campbell, J., & Shiller, R. (1988). The dividend-price ratio and expectations of future dividends and discount factors. Review of Financial Studies, 1(3), 195–228.

    Article  Google Scholar 

  • Chen, X., & Funke, M. (2013). Renewed momentum in the German housing market: Boom or bubble? (CESifo Working Paper No. 4287).

    Google Scholar 

  • Dechent, J. (2004). Preisstatistische Erfassung des selbst genutzten Wohneigentums. Zur Entwicklung eines Häuserpreisindex. Wirtschaft und Statistik 11/2004.

    Google Scholar 

  • Deutsche Bundesbank. (2013). The determinants and regional dependencies of house price increases since 2010. Monthly Report Article October 2013.

    Google Scholar 

  • Dokko, J., Doyle, B., Kiley, M., Kim, J., Sherlund, S., Sim, J., & Van den Heuvel, S. (2011). Monetary policy and the housing bubble (Federal Reserve Board Discussion Series No. 2009-49).

    Google Scholar 

  • Dübel, H., & Iden, S. (2008). Hedonischer Immobilienpreisindex Deutschland. Forschungsauftrag des Bundesamtes für Bauwesen und Raumordnung. Hypoport AG 2008.

    Google Scholar 

  • Eilers, F., & Hofer, T. (2007). Die statistische Erfassung der Immobilienpreisentwicklung in Deutschland. In Professionelles Immobilien-Banking, Fakten und Daten 2007/2008 (S. 50–57). Berlin.

    Google Scholar 

  • European Central Bank. (2015a). The state of the house price cycle in the euro area. Economic Bulletin, 6, pp. 9–24.

    Google Scholar 

  • European Central Bank. (2015b, November). A model-based valuation metric for residential property markets, Box 3. In Financial stability review. Germany: European Central Bank.

    Google Scholar 

  • Glaeser, E., Gottlieb, J. D, & Gyourko, J. (2010). Can cheap credit explain the housing boom? (National Bureau of Economic Research Working Paper No. 16230).

    Google Scholar 

  • Glaeser, E., & Nathanson, C. (2014). Housing bubbles (National Bureau of Economic Research Working Paper No. 20426).

    Google Scholar 

  • Hausman, J., & Taylor, W. (1981). Panel data and unobservable individual effects. Econometrica, 49(6), 1377–1398.

    Article  Google Scholar 

  • Homm, U., & Breitung, J. (2012). Testing for speculative bubbles in stock markets: A comparison of alternative methods. Journal of Financial Economics, 10(1), 198–231.

    Article  Google Scholar 

  • Hott, C., & Jokipii, T. (2012). Housing bubbles and interest rates (Working Papers 2012-07). Swiss National Bank.

    Google Scholar 

  • Igan, D., & Loungani, P. (2012). Global housing cycles (International Monetary Fund Working Paper WP/12/217)

    Google Scholar 

  • Jordà, Ò., Schularick, M., & Taylor, A. (2015). Leveraged bubbles. Journal of Monetary Economics, 76(Supplement), S1–S20.

    Article  Google Scholar 

  • Kajuth, F., Knetsch, T. A., & Pinkwart, N. (2016). Assessing house prices in Germany: evidence from a regional data set. Journal of European Real Estate Research 9(3), 286–307.

    Google Scholar 

  • Kholodilin, K., Michelsen, C., & Ulbricht, D. (2014). Speculative bubbles in urban housing markets in Germany (German Institute for Economic Research Discussion Paper No. 1417).

    Google Scholar 

  • Kholodilin, K., & Ulbricht, D. (2015). Urban house prices: A tale of 48 cities. Economics E-Journal, 9, 1–43.

    Google Scholar 

  • Knoll, K., Schularick, M., & Steger, T. (2014). No price like home: Global house prices, 1870–2012 (CEPR Discussion Paper No. 10166).

    Google Scholar 

  • Kuttner, K. (2012). Low interest rates and housing bubbles: Still no smoking gun (Williams College, Department of Economics Working Papers 2012-01).

    Google Scholar 

  • Poterba, J. (1984). Tax subsidies to owner-occupied housing: An asset market approach. Quarterly Journal of Economics, 99(4), 729–752.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Deutsche Bundesbank, Wilhelm-Epstein-Str. 14, 60431, Frankfurt am Main, Germany

    Florian Kajuth

Authors
  1. Florian Kajuth
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Florian Kajuth .

Editor information

Editors and Affiliations

  1. Chair of Macroeconomics, Technische Universität Berlin, Berlin, Germany

    Frank Heinemann

  2. Darmstadt Business School, Hochschule Darmstadt, Darmstadt, Germany

    Ulrich Klüh

  3. IMK - Macroeconomic Policy Institute, Hans-Böckler-Foundation, Düsseldorf, Germany

    Sebastian Watzka

Rights and permissions

Reprints and permissions

Copyright information

© 2017 Springer International Publishing AG

About this chapter

Cite this chapter

Kajuth, F. (2017). Assessing Recent House Price Developments in Germany: An Overview. In: Heinemann, F., Klüh, U., Watzka, S. (eds) Monetary Policy, Financial Crises, and the Macroeconomy. Springer, Cham. https://doi.org/10.1007/978-3-319-56261-2_11

Download citation

Publish with us

Policies and ethics

Search

Navigation