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Slovene Residential Property Prices Misalignment with Fundamentals

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  • Lenarčič, Črt
  • Damjanović, Milan

Abstract

This paper replicates the computation of an aggregate indicator for Slovene house prices, using a multiple indicator approach developed for the Austrian house price data by Schneider (2013). The aim of the aggregate misalignment indicator is therefore to recognize the under- and over-valuation of house prices in Slovenia. The key findings are that during the 2004-2008 economic boom period the aggregate misalignment indicator clearly shows the significant over-valuation of Slovene house prices, while during the financial crisis there was an abrupt correction in house prices. With real house prices still declining despite recent economic recovery there is currently an under-valuation of house prices present, from the end of 2013 onwards.

Suggested Citation

  • Lenarčič, Črt & Damjanović, Milan, 2015. "Slovene Residential Property Prices Misalignment with Fundamentals," MPRA Paper 101198, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:101198
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    File URL: https://mpra.ub.uni-muenchen.de/101198/1/MPRA_paper_101198.pdf
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    References listed on IDEAS

    as
    1. Dieter Gerdesmeier & Andreja Lenarčič & Barbara Roffia, 2015. "An alternative method for identifying booms and busts in the Euro area housing market," Applied Economics, Taylor & Francis Journals, vol. 47(5), pages 499-518, January.
    2. Matteo Iacoviello & Stefano Neri, 2010. "Housing Market Spillovers: Evidence from an Estimated DSGE Model," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 125-164, April.
    3. Gauti B. Eggertsson & Paul Krugman, 2012. "Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(3), pages 1469-1513.
    4. Darracq Pariès, Matthieu & Notarpietro, Alessandro, 2008. "Monetary policy and housing prices in an estimated DSGE for the US and the euro area," Working Paper Series 972, European Central Bank.
    5. Gattini, Luca & Hiebert, Paul, 2010. "Forecasting and assessing Euro area house prices through the lens of key fundamentals," Working Paper Series 1249, European Central Bank.
    6. Kajuth, Florian & Knetsch, Thomas A. & Pinkwart, Nicolas, 2013. "Assessing house prices in Germany: Evidence from an estimated stock-flow model using regional data," Discussion Papers 46/2013, Deutsche Bundesbank.
    7. Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005. "Assessing High House Prices: Bubbles, Fundamentals and Misperceptions," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 67-92, Fall.
    8. McMillen, Daniel P., 2008. "Changes in the distribution of house prices over time: Structural characteristics, neighborhood, or coefficients?," Journal of Urban Economics, Elsevier, vol. 64(3), pages 573-589, November.
    9. Joachim Zietz & Emily Zietz & G. Sirmans, 2008. "Determinants of House Prices: A Quantile Regression Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 37(4), pages 317-333, November.
    10. Dreger, Christian & Kholodilin, Konstantin A., 2013. "An early warning system to predict speculative house price bubbles," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-26.
    11. Martin Schneider, 2013. "Are Recent Increases of Residential Property Prices in Vienna and Austria Justified by Fundamentals?," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 4, pages 29-46.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Lenarčič, Črt & Zorko, Robert & Herman, Uroš & Savšek, Simon, 2016. "A Primer on Slovene House Prices Forecast," MPRA Paper 103552, University Library of Munich, Germany.
    2. Brian Micallef & Nathaniel Debono, 2020. "The rental sector and the housing block in STREAM," CBM Working Papers WP/03/2020, Central Bank of Malta.
    3. Markus Hertrich, 2019. "A Novel Housing Price Misalignment Indicator for Germany," German Economic Review, Verein für Socialpolitik, vol. 20(4), pages 759-794, November.
    4. Brian Micallef, 2016. "Property price misalignment with fundamentals in Malta," CBM Working Papers WP/03/2016, Central Bank of Malta.
    5. Damjanović, Milan & Lenarčič, Črt, 2023. "Constructing a house price misalignment indicator: revisited and revamped," MPRA Paper 118489, University Library of Munich, Germany.

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    More about this item

    Keywords

    multiple indicator; house prices; under- and over-valuation;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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