REAL ESTATE MARKET AT A CROSSROAD - ERA OF AFFORDABLE HOUSING IS GONE

Klára Čermáková; Eduard Hromada; Ondrej Bednar; Tomáš Pavelka

doi:10.52950/ES.2023.12.1.003

Authors

Klára Čermáková Prague University of Economics and Business, Department of Economics, Czech Republic Author
Eduard Hromada Czech Technical University, Czech Republic Author
Ondrej Bednar Prague University of Economics and Business, dept. of Economics, Czech Republic Author
Tomáš Pavelka Prague University of Economics and Business, Prague University of Economics and Business, Department of Managerial Economics , Czech Republic Author

DOI:

https://doi.org/10.52950/ES.2023.12.1.003

Keywords:

Housing market, Property price, Transactions, Rent, Housing affordability, Market turnover, Inflation, Mortgage loans

Abstract

Within a broad discussion on property price formation and property market specifics this paper aims to investigate the relationship between property price trends and number of transactions occurred on housing market. Specifically, we test if housing transaction volumes and rents are good predictors of housing prices and discuss causalities and differences in this relationship on the sales and rental property markets. We bring evidence from selected European property markets about the relationship between property price trend and number of transactions occurring on this market. We argue that increased number of transactions is predictive of increase in property price, but prices tend to be rigid in the opposite (downward) direction. Thus, cooling down of demand for properties may rather decrease number of transactions than push down property prices. This appealing result may bring light into understanding why property prices appreciate across time and countries.

Data:
Received: 5 Feb 2023
Revised: 1 Apr 2023
Accepted: 17 Apr 2023
Published: 1 May 2023