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Aspects of Macroeconomic House Price Analysis: Model Diversity, Competing Methodologies and Statitical Information Gaps

01/04/2014
Dr. Thomas Knetsch

House prices in Germany have risen strongly over the last three years.
For the first time since the boom following German reunification, an economic upturn has been accompanied by a noticeable increase in residential property prices. This upward price movement, which has been characterised by a considerable momentum in metropolitan areas but is more and more gaining ground at regional level, has given rise to a debate on looming or already present price exaggerations. Market professionals and observers, who for the most part report on individual submarkets, have contributed findings to this discussion, as has empirical economic research, which is making advances in the development and application of indicator models. This article will examine two models that are frequently used in addressing the issue of whether house prices may be overvalued.

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