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Real Estate Investors’ Response to Political Uncertainty - Cross-County Evidence from Germany

Author

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  • Julius Range
  • Lars Jagemann

Abstract

This study examines the linkage between political uncertainty and residential real estate market behavior in Germany. Using spatial regression techniques to address neighborhood spillover effects, we identify district level residential real estate investment activity to be negatively associated with increased political uncertainty. We measure political related uncertainty by applying the media-based Uncertainty Perception Index. We find the results to appear robust in various applied regression specification. Controlling for a broad range of market fundamentals, we find rural areas to be influenced significantly stronger by increasing political uncertainty than urban areas. Further, we use the quarterly flow of transaction prices to isolate the effect of uprising uncertainty on residential real estate values. Our results indicate a strong negative impact of political uncertainty on transaction prices. The results suggest that political uncertainty not only has a significant impact on the behavior of real estate investors, but also on market values.

Suggested Citation

  • Julius Range & Lars Jagemann, 2025. "Real Estate Investors’ Response to Political Uncertainty - Cross-County Evidence from Germany," ERES eres2025_20, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2025_20
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    JEL classification:

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

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