Ranking European Union countries on their long-term prospects for housing price growth: a composite index

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Journal Title
Journal ISSN
Volume Title
Insinööritieteiden korkeakoulu | Master's thesis
Date
2016-06-13
Department
Major/Subject
Real Estate Investment and Finance
Mcode
M3009
Degree programme
Kiinteistötalouden koulutusohjelma
Language
en
Pages
69 + 20
Series
Abstract
A conceptual model – in the form of composite index – is put forward to highlight the comparative inflation potential of national, residential real estate markets of the European Union. The composite index is formed from a suite of economic, demographic, sociological, and environmental variables. They are drawn from the literature as the best indicators of long-term, aggregate housing price growth for the given context. The variables proposed are: future economic growth; future population growth; future population youthfulness; super-normal infrastructure investment; future mortgage growth; latent demand; future climate; supply inelasticity; and cyclical undervaluation. These variables are represented in the composite index by datasets from, respectively: The Atlas of Economic Complexity; United Nations World Population Prospects; Eurostat Europop; European Commission Structural Investment Funding allocation; European Mortgage Federation Hypostat (outstanding loans to disposable income); Eurostat SILC (adults living with parents), and World Bank annual remittance data; Meldelsohn et al. (2000); Nordregio Mountain Areas in Europe, and Eurostat Land Cover (water and wetlands); and the OECD Analytical House Price Database (index price to income ratio). The results indicate differences between countries in their profile for prospective long-term price growth. “Emerging” and “peripheral” countries dominate the high rankings. When compared against countries’ current average dwelling price, the results imply long term price convergence.
Description
Supervisor
Falkenbach, Heidi
Thesis advisor
Falkenbach, Heidi
Keywords
real estate index, cross-border real estate investment, housing price movement, housing inflation, European Union house prices, dwelling price growth prospects
Other note
Citation