Three Essays on Housing Market Analysis in Germany

This book is made up of three distinct papers, all of which focus on real house prices in Germany. The German economy is especially interesting for this endeavor as real house prices, until recently, have been falling steadily over the last twenty five years. The approach of this book is to first examine the development of housing in Germany on an empirical level in order to establish a sound basis for the following research. The first paper points out that real housing prices have risen continuously in the past years in urban areas. The second aim is to analyze these results using economic modeling. This is done in papers two and three, which use a dynamic stochastic general equilibrium (DSGE) and respectively an agent-based model. The first paper analyses therefore the relationship between prices in the German housing market and the yield of ten-year bonds. The methodological approach of the state of North Rhine-Westphalia to value property prices is analyzed and later on used on housing data from 2004 2014. The second paper uses the model of Iacoviello and Neri (2010), a closed economy DSGE model with a housing market, as a framework to analyze the impact of various economic shocks on the real price of housing and other economic variables in Germany. In order to adapt the model to the German economy the model parameters are calibrated on basis of data from Germany between 1991 Q2 and 2014 Q4. The third paper deals with the integration of periods with fixed interest rates into the MATLAB version of the IceACE model designed by Erlingsson et al. (2014). The fixed interest periods used are defined as according to Seubert and Weber (2013), with households setting periods of fife, ten or fifteen years. Many of the 29 simulated variants show similar behavior. However, two variants, which have a restriction of the sale of housing by households in common, show a steady growth of the mortgage stock.