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The Impact of COVID-19 on Real Estate Markets in Germany

Author

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  • Beze Eyayaw

    (University of Duisburg, Essen, Germany)

  • Thiel Patrick

    (RWI and University of Duisburg, Essen, Germany)

Abstract

The COVID-19 pandemic has disrupted established urban patterns. The literature on the impact of the pandemic on the US housing market has shown a significant increase in the demand for suburban housing, resulting in a considerable increase in suburban prices compared to those in the city center (termed the “donut effect”). However, the German housing market did not experience such drastic changes. To examine price and rent adjustments during the pandemic, we analyze detailed housing data and find little evidence supporting the donut effect seen in the US. Apartment rents increase in suburban areas, while house prices do not change significantly. Examining the role of amenities, we find no explanation for price and rent differences between the central business district (CBD) and suburbs. The differences between the two markets may be attributed to cultural and structural distinctions. Our analysis, which includes data on population patterns and migration behavior, reveals that residents in Germany exhibit a slower-moving trend. Our findings remain robust across different settings and subsets of cities.

Suggested Citation

  • Beze Eyayaw & Thiel Patrick, 2025. "The Impact of COVID-19 on Real Estate Markets in Germany," German Economic Review, De Gruyter, vol. 26(2), pages 93-129.
    • Handle: RePEc:bpj:germec:v:26:y:2025:i:2:p:93-129:n:1002
    DOI: 10.1515/ger-2024-0049
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    References listed on IDEAS

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    1. Arjun Ramani & Nicholas Bloom, 2021. "The Donut Effect of Covid-19 on Cities," NBER Working Papers 28876, National Bureau of Economic Research, Inc.
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    5. Gabriel M. Ahlfeldt & Fabian Bald & Duncan Roth & Tobias Seidel, 2020. "Quality of life in a dynamic spatial model," CEP Discussion Papers dp1736, Centre for Economic Performance, LSE.
    6. van Vuuren, Aico, 2023. "Is there a diminishing willingness to pay for consumption amenities as a result of the Covid-19 pandemic?," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    7. Gupta, Arpit & Mittal, Vrinda & Peeters, Jonas & Van Nieuwerburgh, Stijn, 2022. "Flattening the curve: Pandemic-Induced revaluation of urban real estate," Journal of Financial Economics, Elsevier, vol. 146(2), pages 594-636.
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    More about this item

    Keywords

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    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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