The main question which results through the theme is: “Are German real estates overvalued or can the development on the market be explained by macro-economic factors?”
To be able to answer this question it is necessary to firstly define what a bubble is and further analyze general criteria which can lead to it.
After that an analyzation of possible indicators which are linked to the two largest housing bubbles: the The Subprime Crisis in in the USA of the former decade and the housing bubble in Japan in the middle of the 90s will be done and a comparison of those crises will be given.
Based on those findings the development of the current real estate situation of Germany and an overall evaluation of possible legal and political instruments which are supposed to protect from a pricing bubble will be done.
The findings are based on literature review and include an empirical part with expert interviews when it comes to the risk of having a housing bubble specifically in Germany.
Inhaltsverzeichnis (Table of Contents)
- INTRODUCTION
- PROBLEM STATEMENT
- GOAL SETTING AND QUESTION OF RESEARCH
- STRUCTURE AND PROCEDURE
- THEORETICAL REFERENCE FRAME
- PRICE FORMATION ON THE REAL ESTATE MARKET
- DEFINITION OF PRICE BUBBLE
- Real Economic Terms
- Fiscal Terms
- Behavior Based Reasons
- Limited Rationality
- Greater-Fool
- Institutionalization/ Herd instinct
- CONSTRUCTION SCHEME OF A REAL ESTATE BUBBLE
- Displacement
- Boom
- Euphoria
- Profit Taking
- Panic
- INDICATORS OF A REAL ESTATE BUBBLE
- Absolute/Relative Price Development
- Price-Rent-Relation
- Price-Income-Indicator
- Fundamentally Justified Price
- CONSEQUENCES OF A REAL ESTATE BUBBLE
- HOUSING BUBBLES IN THE PAST
- SUBPRIME CRISIS USA
- JAPAN CRISIS
- ANALYSIS OF THE GERMAN MARKET
- GENERAL INDICATORS
- Development of the Demand
- Population Growth
- Household and age structure
- Development of the Supply
- Implications for the financial system
- Bank Landing in Germany
- KEY FIGURE ANALYSIS
- Price-Rent Ratio
- Price-Income Ratio
- Tobin q
- FURTHER INDICATORS
- Inheritance
- Foreign Investors
- INTERPRETATION OF THE FINDINGS
- CONCLUSION
- OUTLOOK
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis examines the German real estate market to determine whether current conditions indicate a boom or a bubble. The work investigates the factors contributing to price fluctuations and analyzes key indicators to assess potential risks.
- The theoretical framework defines the characteristics of a real estate bubble and analyzes the economic factors contributing to its formation.
- The thesis investigates historical examples of housing bubbles and their consequences.
- The work analyzes key indicators in the German market, including price-rent ratios, price-income ratios, and Tobin's q, to identify potential signs of a bubble.
- The study provides an interpretation of the findings and assesses the potential risks and implications of the German real estate market.
- The thesis concludes by presenting an outlook on the future of the German real estate market.
Zusammenfassung der Kapitel (Chapter Summaries)
- INTRODUCTION: This chapter introduces the problem statement, research goal, and structure of the thesis. It outlines the key questions that will be addressed in the subsequent chapters.
- THEORETICAL REFERENCE FRAME: This chapter lays the theoretical foundation for understanding price formation in the real estate market and the definition of a price bubble. It explores various contributing factors, including real economic terms, fiscal terms, and behavioral aspects like limited rationality and the greater fool theory.
- HOUSING BUBBLES IN THE PAST: This chapter delves into historical examples of housing bubbles, examining the subprime crisis in the USA and the Japan crisis. It analyzes the contributing factors and consequences of these events.
- ANALYSIS OF THE GERMAN MARKET: This chapter analyzes the German real estate market by examining general indicators, such as population growth, household structure, and development of the supply. It also investigates key figures like the price-rent ratio, price-income ratio, and Tobin's q.
Schlüsselwörter (Keywords)
This thesis focuses on real estate market dynamics in Germany, analyzing potential indicators of a price bubble. Key topics include price formation, price bubbles, housing market analysis, demand and supply, and relevant economic indicators like price-rent ratios, price-income ratios, and Tobin's q.
- Quote paper
- Valonita Berisha (Author), 2019, Real Estate in Germany. Boom or Bubble?, Munich, GRIN Verlag, https://www.grin.com/document/510370
