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Politics and Housing: The Impact of the Political Environment on Residential Construction in Germany

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  • Julius Range

Abstract

Examining German residential construction activity using quarterly flows of building permits, this study investigates the linkage between politics and housing supply. Applying separate dynamic time series regression models for commercial property developers and owner-occupiers proves the heterogeneity of decision-making concerning considered external factors. The approach finds quarterly flows of building permits for residential property developments to be negative correlated with significant changes in election polls triggered by exogenous shocks. Owner-occupier building activity is found to be positive associated with household’s savings rate appearing to increase during times of crises. Slumps in construction activity are further identified during COVID-19 lockdown periods. The study results prove the impact of political surrounding factors on decision making processes related to residential construction contributing to the comprehensibility of German construction activity.

Suggested Citation

  • Julius Range, 2022. "Politics and Housing: The Impact of the Political Environment on Residential Construction in Germany," ERES 2022_248, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:2022_248
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    Keywords

    political uncertainty; residential construction;

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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