On the Turnaround of Vacancy Stocks: The Stock Flow Model for the German Residential Rental Market

Oliver Bischoff ()
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Oliver Bischoff: Department of Economics, University of Hamburg, Von-Melle-Park 5, 20146 Hamburg, Germany

International Real Estate Review, 2011, vol. 14, issue 2, 159-183

Abstract: We apply the stock flow model for the German residential rental market using a data set that includes the overwhelming majority of nomenclature of territorial units for statistics (NUTS) 3 regions for the 2004-2007 period. Aside from proving conditional rental price convergence, we have detected a turnaround in vacancy stocks between the short and the long term. While East German counties and West German independent cities currently exhibit the highest and lowest vacancy rates, respectively, the opposite holds true at equilibrium. Leaning on theoretical suggestions, landlords in well-developed areas have incentives to hold onto vacancies in view of future rent increases. Our results support this idea, which demonstrates the significantly positive impact of household income and net birth rate on the natural vacancy rate.

Keywords: Rental Market; Adjustment Process; Natural Vacancy Rate; Regional Analysis; Germany (search for similar items in EconPapers)
JEL-codes: L85 (search for similar items in EconPapers)
Date: 2011
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