Ruhr Economic Papers

Ruhr Economic Papers #731

Fundamental Determinants of Real Estate Prices: A Panel Study of German Regions

by Ansgar Belke and Jonas Keil

UDE, 12/2017, 32 S./p., 8 Euro, ISBN 978-3-86788-851-6 DOI: 10.4419/86788851



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.

JEL-Classification: R21, R31

Keywords: Real estate market; fundamental prices; regional data; panel study