Explaining Regional Variation in Equilibrium Real Estate Prices and Income

Oliver Bischoff ()
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Oliver Bischoff: Chair for Economic Policy, University of Hamburg

No 36, Working Papers from Chair for Economic Policy, University of Hamburg

Abstract: We combine the real estate model of Potepan (1996) with the spatial equilibrium approach of Roback (1982) to prove the interdependency of housing prices, rental prices, building land prices and income via one simultaneous equilibrium analysis. Using unique cross-sectional data on the majority of German counties and cities for 2005, we estimate the equations in their structural and reduced form. The results show significantly positive interaction effects of income and real estate prices. Moreover, we can confirm model predictions concerning the majority of exogenous determinants. In particular, expectations about population development seem to be among the most important determinants of price and income disparities between regions in the long term.

Keywords: Regional Housing Markets; Spatial Equilibrium Analysis; Simultaneous Equation; Germany (search for similar items in EconPapers)
JEL-codes: C21 C31 R11 R13 R21 R31 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2010-06-05
New Economics Papers: this item is included in nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published in Hamburg Contemporary Economic Discussions, Issue 36, 2010

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http://www.hced.uni-hamburg.de/WorkingPapers/HCED-036.pdf First version, 2010 (application/pdf)

Related works:
Journal Article: Explaining regional variation in equilibrium real estate prices and income (2012)
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