Disaggregating Housing Market Dynamics: Evidence from a Stock-Flow Model Using Regional Data Across Germany

Abstract

This Dissertation analyses the determining factors, segmentations and fundamental valuations of the german residential real estate market through the application of an advanced Stock-Flow-Model to data collected from different regions across germany
during the period from 2008 to 2024.. Aim of this dissertation is to outline the intricate relationships between supply, demand, demographic changes, macroeconomic fluctuations and ongoing adjustments to policy and environmental standards to analyse its influence on the price formation within the german housing markets.
The study addresses three fundamental research questions concerning price determinants, market segment differentiation, and alignment with essential values. The methodological foundation of this dissertation rests upon the Stock-Flow Model, an advanced analytical framework employed to deconstruct the intricate dynamics of residential property valuation within the German context.
The results show that a strong negative influence on housing prices was consistently found to be exerted by interest rates across all model specifications. On the other hand has income consistently shown positive effects across models, though with varying degrees of magnitude. Single family homes have shown a higher income elasticity as they are considered a luxury consumer good. Demographic factors exhibited complex and sometimes counterintuitive effects on a regional basis.
Through its systematic comparison between different econometric approaches the dissertation makes several important methodological contributions to research around housing economics, and reveals the critical importance of addressing endogeneity concerns in housing market analysis.
This dissertation provides comprehensive empirical evidence of systematic segmentation within the German housing market, demonstrating that apartments and single-family homes operate as distinct market segments with different price determination
mechanisms, economic sensitivities, and adjustment dynamics. The findings fundamentally challenge the common practice of treating housing markets as homogeneous and provide strong empirical support for differentiated analytical and policy approaches.