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Housing Price Bubbles and their Determinants in the Czech Republic and its Regions

Author

Listed:
  • Michal Hlavacek
  • Lubos Komarek

Abstract

This working paper, based on an empirical analysis, discusses factors affecting property prices and tries to identify periods of property price overvaluation by three approaches: using simple ratios related to house prices (price-to-income and price-to-rent), using time series analysis for the Czech Republic as a whole, and using panel regression for the Czech regions. The time series analysis and the simple indicators of housing price sustainability identified overvalued property prices in 2002/2003 and partly also in 2007/2008. According to the time series analysis, however, the size of the housing price overvaluation in 2007/2008 was relatively low, as the rise in property prices in this period was largely explainable by fundamentals. From the regional perspective, there is a higher degree of overvaluation in regions with higher property prices. The exception is Prague, which seems to be a “specific†region.

Suggested Citation

  • Michal Hlavacek & Lubos Komarek, 2009. "Housing Price Bubbles and their Determinants in the Czech Republic and its Regions," Working Papers 2009/12, Czech National Bank, Research Department.
  • Handle: RePEc:cnb:wpaper:2009/12
    as

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    File URL: http://www.cnb.cz/en/research/research_publications/cnb_wp/download/cnbwp_2009_12.pdf
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Hana Hejlová & Michal Hlaváček & Luboš Komárek, . "A Comprehensive Method for House Price Sustainability Assessment in the Czech Republic," Prague Economic Papers, University of Economics, Prague, vol. 0, pages 1-17.
    2. Jarko Fidrmuc & Matus Senaj, 2012. "Human Capital, Consumption, and Housing Wealth in Transition," Working and Discussion Papers WP 2/2012, Research Department, National Bank of Slovakia.
    3. Kamil Galuscak & Adam Gersl & Marcela Gronychova & Petr Hlavac & Petr Jakubik & Lubos Komarek & Zlatuse Komarkova & Tomas Konecny & Jakub Seidler, 2014. "Stress-Testing Analyses of the Czech Financial System," Occasional Publications - Edited Volumes, Czech National Bank, Research Department, edition 1, volume 12, number rb12/1 edited by Jan Babecky & Roman Horvath.

    More about this item

    Keywords

    Asset price bubbles; Czech Republic and its regions; housing prices; panel regression.;

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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