| Summary: | In this thesis I study the German housing market and specifically the level of housing investment. First, a theoretical background to housing market dynamics is presented and then I test whether there is a relationship between housing investments and GDP, the size of the population, Tobin’s Q and construction costs. An Error Correction Model is estimated and the result is that the equilibrium level of housing investment is restored after less then two quarters after a change in one of the explainable variables. The estimation indicates that GDP, the size of the population and construction costs affect the level of construction in the short run. However, in the long run the only significant effect is changes in construction cost.
|
|---|
