R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing DemandReturn

The study examines housing affordability in Germany from 2017 to 2023 in light of rising real estate prices and challenges in the housing market. It uses the Housing Affordability Index to identify trends and patterns and propose policy measures to tackle the problems. The results show regional differences, with large cities in particular facing rising prices. Overall, the housing affordability burden has worsened across the country, with the western federal states being particularly affected. Future research should focus on evaluating policy measures and analyzing future trends in order to develop appropriate strategies and make predictions for the future.

Although the use of residential real estate macroprudential tools has become common in recent years, rigorous approaches to their calibration have been relatively scarce. The goal of this paper is to present an approach to (i) evaluating direct risks to financial stability related to residential real estate exposures, and to (ii) calibrating borrower-based macroprudential measures. First we present a macroprudential indicator of potential losses related to the provision of new mortgage loans. Then we show how to determine risky values of the loan-to-value, loan-to-income and loan service-to-income ratios by per-forming stress tests on the individual new mortgage loans. Finally, we demonstrate the applicability of this approach on the case of the Czech Republic. We conclude by show-ing that simultaneous adoption of several macroprudential measures may enhance their efficiency without imposing higher restrictions on the mortgage market.

The article describes approach proposed for the house price equilibrium assessment in the Czech Republic. It first explains why it is necessary to use multiple models simultaneously to correctly assess house price sustainability. It goes on to describe individual models proposed to estimate house price misalignment in the Czech Republic. Results given by these individual models are consonant in identifying periods of over- and undervaluation of house prices but slightly differ in the amplitude of the gaps. A method for aggregating the estimates produced by those approaches is then presented. It works on the premise that more correlated estimates may be evidence of a strong signal, while less correlated estimates may, on the other hand, bring additional information to the house price assessment. By using two sets of weights, it presents an interval of supposed under- or overvaluation of house prices. This method indicates that Czech house prices were roughly at their equilibrium level in mid-2014 following an extended period of slight undervaluation since the mid-2009. It also proves robust to the length of the sample used.

The paper deals with some relevant effects of appreciation of housing prices on social and aggregate welfare. As it has been found difficult to assess the current situation given the housing market being the most affected by the crisis, earlier data from 1995 to 2006 have been used. It generalizes previously available results by considering credit constraints together with endogeneity of housing prices. First, housing price appreciation implies improvement in aggregate welfare in a model with exogenous housing price and credit constraints. Then, housing price is endogenized by modelling the supply side of the housing market. In this model, housing price appreciation is caused by supply and demand shocks. The supply shock originates from a change in building permit cost. The demand shifts are generated by changes in household income and interest rates. Both credit-constrained and unconstrained versions of this model are considered. Finally, the combination of observed demand and supply shocks is used to quantify aggregate welfare effects on the US housing market. The results demonstrate that demand shocks dominated during that period and the aggregate welfare improved as a result of housing price appreciation.

The paper deals with the hypothesis of housing price bubble in the Czech economy. This topic is very popular among economists worldwide now, especially because of the U.S. housing crisis and subsequent collapses on financial markets. However, surprisingly there are not many analyses dealing with the Czech housing market (besides e.g. very brief Financial Stability Report published by the Czech National Bank in 2008) and with the possible housing bubble burst. The first standard bubble indicators like P/I ratio are used to identify the bubble possibility on the Czech housing market. As the second step a regression analysis (VAR model) is being used for deeper analysis of the situation. The whole analysis is complicated by a lack of relevant data and quite short-time series.