The Impact Of Macroeconomic And Demographic Factors On Residential Property Prices In The Selected European Countries

The importance of housing equity in Europe can not be overestimated, as it accounts for about 60% of household wealth according to ECB and OECD. The dynamics of the business cycle and expectations for macroeconomic performance are significantly influenced by shifts in the housing market1 . Despite its relatively small size in the economy (representing 6% of GDP from Q1 1997 to Q1 2018 in nominal terms), residential investment is known for its high volatility compared to other GDP expenditure components2 . Over time, European housing markets have witnessed fluctuations in housing prices due to events like Global Financial Crisis in 2007, European Sovereign Debt Crisis, COVID-19 crisis. While economic growth, inflation, unemployment rates, and demographic shifts have all been potential drivers of housing prices, further analysis might be helpful in identifing the specific factors contributing to European residential property price dynamics (within the context of these potential drivers). This research delves into the dynamics of housing prices across various clusters within the European housing market. It aims to uncover the underlying relationships between housing prices, socio-economic factors, and other key determinants.