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On the Turnaround of Vacancy Stocks: The Stock Flow Model for the German Residential Rental Market

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  • Oliver Bischoff

    (Department of Economics, University of Hamburg, Von-Melle-Park 5, 20146 Hamburg, Germany)

Abstract

We apply the stock flow model for the German residential rental market using a data set that includes the overwhelming majority of nomenclature of territorial units for statistics (NUTS) 3 regions for the 2004-2007 period. Aside from proving conditional rental price convergence, we have detected a turnaround in vacancy stocks between the short and the long term. While East German counties and West German independent cities currently exhibit the highest and lowest vacancy rates, respectively, the opposite holds true at equilibrium. Leaning on theoretical suggestions, landlords in well-developed areas have incentives to hold onto vacancies in view of future rent increases. Our results support this idea, which demonstrates the significantly positive impact of household income and net birth rate on the natural vacancy rate.

Suggested Citation

  • Oliver Bischoff, 2011. "On the Turnaround of Vacancy Stocks: The Stock Flow Model for the German Residential Rental Market," International Real Estate Review, Global Social Science Institute, vol. 14(2), pages 159-183.
    • Handle: RePEc:ire:issued:v:14:n:02:2011:p:159-183
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    References listed on IDEAS

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    1. Sala-i-Martin, Xavier X, 1996. "The Classical Approach to Convergence Analysis," Economic Journal, Royal Economic Society, vol. 106(437), pages 1019-1036, July.
    2. Fuchs-Schündeln, Nicola & Izem, Rima, 2012. "Explaining the low labor productivity in East Germany – A spatial analysis," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 1-21.
    3. Reinhold Kosfeld & Hans-Friedrich Eckey & Christian Dreger, 2006. "Regional productivity and income convergence in the unified Germany, 1992-2000," Regional Studies, Taylor & Francis Journals, vol. 40(7), pages 755-767.
    4. Dohse, Dirk & Krieger-Boden, Christiane & Sander, Birgit & Soltwedel, Rüdiger, 2002. "Vom Mangel zum Überfluss - der ostdeutsche Wohnungsmarkt in der Subventionsfalle," Kiel Discussion Papers 395, Kiel Institute for the World Economy (IfW Kiel).
    5. Li Gan & Qinghua Zhang, 2006. "The Thick Market Effect on Housing Markets Transactions," NBER Working Papers 12134, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Rental Market; Adjustment Process; Natural Vacancy Rate; Regional Analysis; Germany;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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