Regional Analysis of Real Estate Bubbles in the Czech Republic
|Author:||Bc. Dominik Benk,|
|Year:||2019 - summer|
|Leaders:|| Mgr. Petr Polák MSc. Ph.D.
|Work type:|| Bachelors
|Awards and prizes:|
|Abstract:||The recent increase in real estate prices in the Czech Republic had a serious
impact on the accessibility of housing. This thesis aimed to assess, whether
it was justifed by changes in economic fundamentals via the approach of inverted demand. Two distinct models were described and each was applied to
a separate dataset. The crucial diference is the way these models deal with
non-stationary data, i.e. either the variables are diferenced or the cointegrating relationship is examined. Estimation itself was done by Fixed-efects or
Dynamic OLS, and the latter model additionally allowed to evaluate the speed
of adjustment to equilibrium. Various macroeconomic factors were considered
out of which wages, unemployment, natural increase in population, net migration, construction prices and real interest rates turned out to be fundamental
drivers of fat prices. Real estate price bubbles were then evaluated with Price
to income and Price to rent indicators, followed by an analysis of diferences
between actual and fundamental prices, which utilized models of determinants.
The results suggested 2 main periods of overvaluation, namely 2003 and 2008,
and a high risk of current overvaluation in Prague and region Jihomoravský.