Renewed Momentum in the German Housing Market: Real-Time Monitoring of Boom vs. Bubble

Xi Chen and Michael Funke

Chapter 16 in Papers presented during the Narodowy Bank Polski Workshop: Recent trends in the real estate market and its analysis - 2015 edition, 2016, pp 203-226 from Narodowy Bank Polski

Abstract: The renewed momentum in the German housing market has led to concerns that Germany is vulnerable to asset price shocks. In this paper, we apply recently developed recursive unit root tests to detect the beginning and the end of potential speculative bubbles in Germany over the sample period 1987Q3 – 2013Q4. Overall, we find that actual house prices are not significantly disconnected from underlying economic fundamentals. Thus, there is no evidence of speculative house price bubbles in Germany.

Keywords: Germany; House Price Bubbles; Real-Time Monitoring; Right-Tailed Unit Root Tests (search for similar items in EconPapers)
JEL-codes: C22 C53 E52 R31 (search for similar items in EconPapers)
Date: 2016
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