Think national, forecast local: a case study of 71 German urban housing markets

Konstantin Kholodilin () and Boriss Siliverstovs

Applied Economics, 2017, vol. 49, issue 42, 4271-4297

Abstract: In this article, we examine whether the local indicators are able to predict the city-level housing prices and rents better than national indicators. For this purpose, we assess the forecasting ability of 126 indicators and 21 types of forecast combinations using a sample of 71 large German cities. There are several predictors that are especially useful, namely price-to-rent ratios, national-level business confidence, and consumer surveys. We also find that combinations of individual forecasts are among the top forecasting models. On average, the forecast improvements attain about 20%, measured by a reduction in root mean square error, compared to the naive models.

Date: 2017
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Working Paper: Think national, forecast local: A case study of 71 German urban housing markets (2015)
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DOI: 10.1080/00036846.2017.1279272

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