Latterly the capital of Germany alludes to a potential real estate bubble. Does the strong price increase of 73 % on average between 2007 and 2013 really rely on speculative market behaviour or is the trend rather determined by fundamental factors? In order to find this out, the following paper examines several determinants of demand for residential objects through a qualitative analysis. Relevant determinants such as supply of credit, demographic aspects, income and economic growth, real long term interest rates and monetary policy, rent prices, substitution goods as well as the factor of expectations of the future house price development were investigated by means of empirical analysis. Anyways, the unclear result argues in favour of a price increase mainly caused by the fundamental factors.
Aim of the thesis is to get a better knowledge on the assessment of bubble existence in housing markets. According to mainstream economics, the process itself is considered relatively difficult. However, an advantage of such a work is that I can eventually use the gained information to implement a real project in the future. In addition, this kind of problem approach could then be used for other markets as well: proving a price increase, finding out how it came about, discovering if its factors consist in a bubble risk or not.
Aim of the thesis isn't neither to determine if, how and when a possible bubble will burst, nor examining its effects on the overall economy. From the point of view of a relatively risk averse investor, namely, already the fact that a bubble may exist should be enough reason not to go for an investment in such a market. The reason why I look at a single region instead of an entire country is that plenty of past housing bubbles began to arise in single parts of lands and then eventually expanded to the whole country or even to a whole continent like it happened in the case of the US in 2007. House price dynamics are a local phenomenon, and national-level data conceal crucial economic differences among cities (Himmelberg et al., 2005).
This thesis refers to residential properties and not to commercial properties such as office buildings, industrial, retail or restaurants. However, I'm going to put prices of existing properties and new properties together since new buildings only account for a little part in this market (Sparber, 2014).
Inhaltsverzeichnis (Table of Contents)
- Abstract (English)
- Abstract (Deutsch)
- Abstract (Italiano)
- 1 Introduction
- 2 Theoretical background
- 2.1 The housing market
- 2.2 Real estate bubbles
- 2.3 Determinants of house prices
- 3 Empirical analysis
- 3.1 Data and methodology
- 3.2 Results and discussion
- 4 Conclusion
- Bibliography
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis examines the potential existence of a real estate bubble in Berlin, focusing on the significant price increase in residential properties between 2007 and 2013. The main objective is to analyze the factors influencing housing demand and determine whether the price surge is primarily driven by speculative market behavior or by fundamental economic factors.
- Real estate market dynamics in Berlin
- Analysis of factors driving housing demand
- Assessment of speculative market behavior
- Investigation of fundamental economic factors impacting prices
- Empirical analysis of relevant data
Zusammenfassung der Kapitel (Chapter Summaries)
- Chapter 1: Introduction provides a brief overview of the research topic, highlighting the recent price increases in Berlin's real estate market and the potential for a bubble. It outlines the scope and objectives of the thesis.
- Chapter 2: Theoretical background explores the housing market dynamics, characteristics of real estate bubbles, and identifies key determinants of house prices. This chapter provides a theoretical framework for the analysis.
- Chapter 3: Empirical analysis delves into the data and methodology employed in the research. It examines the results and discusses the findings, analyzing the influence of various factors on housing demand.
Schlüsselwörter (Keywords)
This research focuses on the following key areas: real estate, housing market, bubble, Berlin, demand determinants, speculative behavior, fundamental factors, empirical analysis, price trends.
- Quote paper
- Simon Sparber (Author), 2014, Real estate market in Berlin. Is there any bubble?, Munich, GRIN Verlag, https://www.grin.com/document/314881
