Economics at your fingertips  

Liquidity and prices: a cluster analysis of the German residential real estate market

Marcelo Cajias (), Philipp Freudenreich (), Anna Freudenreich () and Wolfgang Schäfers ()
Additional contact information
Marcelo Cajias: Patrizia Immobilien AG
Philipp Freudenreich: University of Regensburg
Anna Freudenreich: University of Regensburg
Wolfgang Schäfers: University of Regensburg

Journal of Business Economics, 2020, vol. 90, issue 7, No 3, 1056 pages

Abstract: Abstract This paper analyses the highly under-researched German residential real estate market. Quality- and spatial-adjusted price and liquidity indices are calculated separately for the investment and rental market on a regional basis. Applying the “Partitioning Around Medoids (PAM)” clustering algorithm, the regions are clustered with respect to their price and liquidity development after the average silhouette method is applied to find the optimal number of clusters. The dataset underlying this analysis comprises more than 4.5 million observations in 380 German regions from 2013 Q1 to 2018 Q4. The clusters are then analysed by means of further economic and socioeconomic data in order to identify similarities. Furthermore, the clusters are interpreted from a geographic perspective. We find that the allocation to cluster 1 is always supported by higher growth rates in the variables, population, working population and real GDP, implying higher demand for space. Moreover, in each of the analysed categories cluster 1 reveals a lower unemployment rate as well as a higher disposable income. One of the most interesting implications is, that apparently a large part of the German population has developed into professional real estate investors. In Germany the largest share of landlords is the one of the so-called non-professional landlords. As the regions assigned to cluster 1, displaying the most significant price increase, seem to be chosen based on a very sophisticated market analysis by identifying the regions with the strongest fundamental data, it seems like the dominating market players have significantly increased their knowledge and approach for investing in residential real estate.

Keywords: Residential; Housing; Liquidity; Index; Time on market; GAMLSS; Cluster; Partitioning around medoids (search for similar items in EconPapers)
JEL-codes: R2 R21 R3 R32 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

DOI: 10.1007/s11573-020-00990-2

Access Statistics for this article

Journal of Business Economics is currently edited by Günter Fandel

More articles in Journal of Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2021-01-23
Handle: RePEc:spr:jbecon:v:90:y:2020:i:7:d:10.1007_s11573-020-00990-2